For all Citigroup's perceived flaws in the Chuck Prince era, the company seemed to make steady and visible progress under the lawyer's watchful eye in terms of its internal controls and its relationship with the myriad regulators who oversee its far-flung operations. In the past week, however, there have been signs of slippage — with one instance bearing more than a passing resemblance to difficulties it faced before Prince's governmental-relations repair work.
The blog Housing Wire last week reported that Citigroup had put its
Citi's recent censure in Japan is perhaps even more telling. Japanese regulators announced Friday that they would
The U.S. regulator for money laundering, the Treasury Department's Financial Crimes Enforcement Network, has engaged in enforcement actions against several banks in recent years over failures to adequately handle suspicious activity reports or otherwise maintain a good internal auditing system to catch financial crimes. But it's been nearly two years since FinCEN has cited a U.S.-based bank. A spokesman for the agency would not say whether Japan's FSA's move would prompt any additional monitoring of Citi in the U.S.
Current CEO Vikram Pandit has tried to maintain Citi's image as a functioning global bank, and as an institution that is on track to regain its independence from the government and re-cast itself as a top competitor in markets around the world. So the timing of these missteps is especially problematic. Because the last thing Citi needs now is evidence that its operational house is not in order.