Citigroup nearly credited client with $81 trillion instead of $280

WTF?! Citigroup, one of the world's largest financial institutions, narrowly avoided a colossal error that would have sent ripples through the banking industry. Last April, the bank inadvertently credited a client's account with an astounding $81 trillion when it intended to transfer a mere $280.

This monumental mistake, previously unreported, has come to light at a critical time for Citigroup. The bank is currently striving to convince regulators that it has addressed long-standing operational issues, and this incident may undermine those efforts.

The erroneous internal transfer occurred due to oversights and system quirks. An internal report of the event, obtained by the Financial Times, notes that the error slipped past two staff members. A payments employee made the initial mistake. A second bank official overlooked the error when verifying the transaction. Fortunately, a third auditor caught the mega-blunder after detecting an anomaly in the bank's account balances 90 minutes after the transaction posted to the account.

An unnamed source familiar with the incident said a combination of human error and a cumbersome user interface in the bank's backup system caused the mistake. In mid-March, the bank posted the payment to a customer's escrow account in Brazil, but a screening process blocked it over a sanctions violation. Although quickly cleared, the payment remained stuck in the bank's system.

To resolve this, Citigroup's technology team instructed the payments processing employee to manually input the transactions into a rarely used backup system. However, its interface had a peculiar quirk: the amount field automatically pre-populated with 15 zeros, which the employee should have deleted before entering the correct amount but didn't.

Despite the magnitude of the error, a Citigroup spokesperson pointed out that the internal controls quickly identified and rectified the mistake. The auditor caught the mistake within 90 minutes and reversed the transaction. The spokesperson stressed that no funds ever left the bank.

A person knowledgeable of the matter noted that Citigroup disclosed this "near miss" to the Federal Reserve and Office of the Comptroller of the Currency shortly after it occurred. This transparency comes when the bank is under intense regulatory scrutiny. The incident is part of a broader pattern of operational challenges at Citigroup.

An internal report revealed that the bank experienced 10 near misses of $1 billion or more in the past year, slightly down from 13 in the previous year. Speaking anonymously, several former regulators and bank risk managers told FT that near misses of this scale are unusual across the U.S. banking industry.

This series of near misses underscores Citigroup's ongoing struggle to resolve operational issues, nearly five years after a high-profile $900 million mistaken payment related to cosmetics group Revlon. That incident led to significant consequences, including the departure of then-CEO Michael Corbat, substantial fines, and regulatory consent orders mandating fixes to these issues.

Jane Fraser, who succeeded Corbat as CEO in 2021, has made addressing these regulatory concerns her "top priority." However, the bank struggles to make progress, as evidenced by a $136 million fine imposed last year by regulators for failing to correct problems in risk control and data management.