Citigroup Payment Fumble: Erroneous $81 Trillion Transfer Bypasses Controls
Citigroup, one of the most recognized banks in the world, was almost involved in a trillion-dollar mistake last year. In April, the bank executed a transfer of $81 trillion to a customer, an error that would have been critical for the institution.
According to CNBC, the transfer passed the revision of two employees but was detected by a third one 90 minutes afterwards. While the funds would have been unable to move, the episode shows the deficiencies that plague the world of fiat banking.
The bank moved to reverse the funds several hours later, as the customer was only meant to be credited with $280. The circumstances that prompted this error were not disclosed.
This kind of event, where an erroneous payment is charged but the bank can recover the funds, is called a “near miss.” For Citigroup, near misses are more common than they should be, as this happened ten times during 2024, involving $1 billion or more. The year before, it happened 13 times.
In a statement, Citigroup explained:
Our preventative controls would have also stopped any funds leaving the bank. While there was no impact to the bank or our client, the episode underscores our continued efforts to continue eliminating manual processes and automating controls through our Transformation.
Citigroup has been heavily criticized by regulators, leading to the ousting of its former CEO Michael Corbat. Financial media has reported that Corbat had trouble implementing tech and compliance controls.
One of the reasons that led Corbat to early retirement was an erroneous payment to Revlon’s creditors. The company sent nearly $900 million mistakenly in 2020, giving place to a saga that ended with a court settlement in 2022.
While the new CEO has committed to improving the bank’s compliance and oversight methods, this event shows that there is still work to be done.
