Citibank Europe has been fined €1.33m ($1.52m) by the Irish central bank.
This was incurred for flouting the code of practice on lending to related parties. This requires credit institutions to have adequate controls to support their related party lending.
A history of breaches
The latest move follows a probe by the central bank that revealed six breaches of the code by Citibank between 2011 and 2016.
The watchdog said that the bank lacked adequate policies to implement the code. In addition, it failed to secure approval of its own related party lending committee before granting loans to related parties.
The bank was also accused of failing to report certain related party exposures and certain deviations from the code requirements to the central bank within a specified time.
Central Bank of Ireland director of enforcement and anti money laundering Seána Cunningham said: “The Related Party Lending Code was introduced to create a formal framework for credit institutions to prevent abuses and address possible conflicts of interest by requiring all related party lending to be at arm’s length and subject to management oversight and regular reporting to the Central Bank.
“The Code imposes a set of clear requirements on credit institutions. The Central Bank’s investigation found that Citibank failed to put in place the necessary governance, policies and procedures to implement the regime until 2 years and 8 months after the Code came into effect. Those deficiencies were followed by breaches of reporting and loan approval requirements.”
However, in deciding the fine, the central bank considered the measures undertaken by the bank to address the issue. Furthermore, its cooperation in the probe helped.
Also, the bank has admitted to the breaches but said that it did not impact clients.