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Company CitiGroup [Company Info]
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Date Issue Title
17th Sep 2004 Questionable Practice Japan closes Citigroup branches

Japan's market watchdog has ordered US banking giant Citigroup to shut down its private banking operations there.

Regulators said they found a list of problems at Citigroup's private banking arm, from improper trading practices to lax anti-money laundering procedures. The regulator said Citigroup must cease operations at four branches that conduct private banking in Japan.

The bank has apologised, saying six staff have left and a further eight reprimanded over the affair.

The decision means fresh embarrassment for Citigroup, which earlier this week admitted that it had erred in a massive bond deal in Europe last month. UK, French and German regulators are looking at the bond trades, which rocked the market in August.

Japan's Financial Services Agency ordered the US banking group to suspend new private banking business by the end of this month, and gave it one year's breathing space to close all accounts at the four branches. They will have their licences revoked on 30 September 2005.

Among its charges, the FSA said the bank had brokered deals on such items as artworks without properly informing customers of the risks.

It also allowed transactions which "could be suspected of being associated with money laundering".

"In a management environment in which profits are given undue importance by the bank's headquarters, a law-evading sales system that disregards the laws and regulations of Japan was constructed," the FSA said.

Bank staff and managers, it added, had "obstructed inspectors", while responses to official inquiries "differed from the truth".

As well as the closure of the private banking arm, which becomes final on 30 September 2005, Citigroup is banned from accepting foreign currency deposits from new customers for a month starting on 29 September.

The severity of the punishment took observers by surprise.

Citigroup is only the latest in a long string of foreign institutions to come in for censure from the Japanese Financial Services Agency.

Earlier the same day, brokerage Cantor Fitzgerald was found to have engaged in irregular trading, while UBS and Deutsche Bank have also been criticised.

Other Reports on CitiGroup
Date Issue Company Report
7th Aug 2008 Questionable Practice CitiGroup Citigroup reaches SEC settlement
10th May 2006 Other Issue CitiGroup Citibank overcharged customers in Japan
28th Jun 2005 Other Issue CitiGroup Citigroup fined 14m by UK watchdog
10th Jun 2005 Fraud Investigation CitiGroup Citigroup pays $2bn in Enron case
25th Jan 2005 Fraud Investigation CitiGroup Criminal probe on Citigroup deals
4th Oct 2004 Fraud Investigation CitiGroup South Korea to scrutinise Citigroup
11th May 2004 Fraud Investigation CitiGroup Citigroup settles Worldcom claims
19th Jun 2003 Other Issue CitiGroup Citicorp Brokerage Executive Fired

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