Citigroup took several hours to reverse the transaction, earning $81 trillion in its customer accounts rather than just $280. This is an embarrassing “near miss” for banks struggling to solve operational problems.
The financial seismic errors that occurred last April were overlooked by the second official assigned to check transactions before they were cleared to be processed the following day, the Financial Times reported Friday.
According to two well-versed members of the event, a third employee caught the error almost two hours after the payment was processed, and the transaction was eventually cancelled a few hours later.
The $280 was to be placed in a Brazilian customer's escrow account before the 14-digit total was blocked by a screen catching payments that was a potential sanctions violation, the FT reported.
Nevertheless, the $81 trillion payment was cleared after being manually entered into a rarely used program that pre-filled 15 zeros that anyone processing the transaction did not delete.
No funds were paid by Citi who disclosed a near mistake when the bank processed the wrong amount but was able to retrieve the funds.
“Our detective control quickly identified input errors between two Citi Ledger accounts and reversed the entries. Preventive control would have also stopped funds leaving the bank,” a Citi spokesman told the Post.
The person in charge added, “We couldn't actually make payments for this size.”
But near misses could hit an attempt to convince CEO Jane Fraser that he had pushed federal regulators into operational errors.
A similar blunder led to the expulsion of Fraser's predecessor, Michael Corbat, after the bank accidentally sent $900 million to creditors of cosmetic giant LeBron.
The Financial Times cited a leaked internal city report that said in 2024 that more than $1 billion in “near misses” were $1 billion, down from 13 the previous year.
The Fed slapped the company with a $136 million fine last year due to “inadequate progress” in fixing a data management issue that was first identified in 2020.
Last month, CITI CFO Mark Mason said banks are investing more to address compliance issues and referring to regulatory penalties for risk management and data governance.
“We thought we needed to invest more in data transformation to improve the quality of the information coming from data, technology and regulatory reports,” Mason said.
In 2022, Citi employees caused a stock market defeat in Europe by accidentally adding zeros to their trading.
This led to a sale that wiped out roughly $322 billion from European stocks.
