Citibank, N.A.

FCA action

fines

2

in fines

£269.5m

most recent

November 2019

• Fined £43.89m on 26 November 2019

  On 26 November 2019, the PRA issued Citigroup Global Markets Limited (CGML), Citibank N.A. London Branch (CBNA London) and Citibank Europe Plc UK branch (CEP UK) (“Citi”) with a financial penalty of £43,890,000 pursuant to section 206 of the Financial Services and Markets Act 2000. The reason for this action was that, between 19 June 2014 and 31 December 2018, Citi breached relevant requirements under the PRA Rulebook. Specifically, CGML and CBNA London breached Fundamental Rule 6 (a firm must organise and control its affairs responsibly and effectively). CBNA London and CEP UK also breached the Branch Rule Return (requires incoming and third-party firms to provide the PRA with specified information) and all three firms breached Rule 6.1 of the Notifications Part of the PRA rulebook (firms must take reasonable steps to ensure the information they submit to the PRA is complete and accurate).    A copy of the Final Notice can be found on the Bank of England’s website and can be accessed.

• Fined £225.57m on 11 November 2014

  The Financial Conduct Authority (the FCA) imposed a financial penalty of £225,575,000 on Citibank N.A. (Citi) of Citigroup Centre, Canada Square, Canary Wharf London, E14 5LB. The FCA's action took effect on 11 November 2014 and a copy of the Final Notice, which sets out the reasons for the action is displayed on the FCA's website and can be accessed via the following link: http://www.fca.org.uk/static/documents/final-notices/final-notice-citi-bank.pdf The foreign exchange market (FX market) is one of the largest and most liquid markets in the world. Its integrity is of central importance to the UK and global financial systems. Over a period of five years, Citi failed properly to control its London voice trading operations in the G10 spot FX market, with the result that traders in this part of its business were able to behave in a manner that put Citi's interests ahead of the interests of its clients, other market participants and the wider UK financial system. The FCA expects firms to identify, assess and manage appropriately the risks that their business poses to the markets in which they operate and to preserve market integrity, irrespective of whether or not those markets are regulated. The FCA also expects firms to promote a culture which requires their staff to have regard to the impact of their behaviour on clients, other participants in those markets and the financial markets as a whole. Citi's failure adequately to control its London voice trading operations in the G10 spot FX market is extremely serious. The importance of this market and its widespread use by market participants throughout the financial system means that misconduct relating to it has potentially damaging and far-reaching consequences for the G10 spot FX market and financial markets generally. The failings described in the Final Notice undermine confidence in the UK financial system and put its integrity at risk. Citi breached Principle 3 of the FCA's Principles for Businesses in the period from 1 January 2008 to 15 October 2013 (the Relevant Period) by failing to take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems in relation to G10 spot FX voice trading in London. References in the Final Notice to Citi's G10 spot FX trading business refer to its relevant voice trading desk based in London. During the Relevant Period, Citi did not exercise adequate and effective control over its G10 spot FX trading business. Citi relied primarily upon its front office FX business to identify, assess and manage risks arising in that business. The front office failed adequately to discharge these responsibilities with regard to obvious risks associated with confidentiality, conflicts of interest and trading conduct. The right values and culture were not sufficiently embedded in Citi's G10 spot FX trading business, which resulted in it acting in Citi's own interests as described in the Final Notice without proper regard for the interests of its clients, other market participants or the wider UK financial system. The lack of proper control by Citi over the activities of its G10 spot FX traders in London undermined market integrity and meant that misconduct went undetected for a number of years. Citi's control and risk functions failed to challenge effectively the management of these risks in the G10 spot FX trading business. Citi's failings in this regard allowed the following behaviours to occur in its G10 spot FX trading business: (1) Attempts to manipulate the WMR and the ECB fix rates in collusion with traders at other firms, for Citi's own benefit and to the potential detriment of certain of its clients and/or other market participants; (2) Attempts to trigger clients' stop loss orders for Citi's own benefit and to the potential detriment of those clients and/or other market participants; and (3) Inappropriate sharing of confidential information withtraders at other firms, including specific client identities and, as part of (1) and (2) above, information about clients' orders. These failings occurred in circumstances where certain of those responsible for managing front office matters were aware of and/or at times involved in behaviours described above. They also occurred despite the fact that risks around confidentiality were highlighted when in August 2011 Citi became aware that a trader in its FX business outside London had inappropriately shared confidential client information in a chat room with a trader at another firm. Citi was aware during the Relevant Period of misconduct associated with LIBOR / EURIBOR, which was identified in well-publicised Final Notices issued against other firms. Citi was not subject to enforcement action by the FCA for LIBOR / EURIBOR misconduct during the Relevant Period. It nonetheless engaged in a remediation programme across its businesses in response to these Notices.This included taking steps to improve procedures for Citi's contributions to submissions-based benchmarks and to embed the right values in its business. Despite these improvements, the steps taken during the Relevant Period in its G10 spot FX trading business did not adequately address the root causes that gave rise to failings described in the Final Notice. The FCA acknowledges the significant co-operation and assistance provided by Citi during the course of its investigation. Citi is continuing to undertake remedial action and has committed significant resources to improving the business practices and associated controls relating to its FX operations. The FCA recognises the work already undertaken by Citi in this regard. The Final Notice relates solely to Citi's conduct in its G10 spot FX trading business in London. It makes no criticism of any entities other than the firms engaged in misconduct as described in the Final Notice.