And… the this just keep on coming. This week, Citigroup is in the news, revealing that a federal probe is currently underway into its anti-money laundering (AML) compliance. This comes days after it disclosed that there is the possibility of $400 million in fraud at its Mexican subsidiary, Banamex. Thanks in large part to this discrepancy, Citigroup slashed its 2013 profits by $235 million and an immediate drop in its share price on the stock market.

You can be certain that, if Citigroup’s AML policies and controls are found to be deficient, the government will levy a substantial fine on top of the money the financial institution has already lost due to theft. So what happened? In this scenario, the details are still sketchy, but seem to point to a Banamex employee’s suspected involvement in the scheme.

One of the ways financial organizations minimize their risk of internal security breaches is through independent auditing and testing of AML compliance programs. Since compliance regulations are constantly being revised and tightened, it’s essential to closely monitor how well each organization’s programs are mirroring these updates. Oftentimes, independent consultants conducting surveys can pinpoint process inefficiencies that, once corrected, actually more than pay for the reviews.

Perhaps more importantly, a regular schedule of independent audits can help a financial organization identify and correct deficiencies BEFORE they are found by regulatory agents, helping safeguard a bank’s reputation and minimize its risk.

By Richard Paxton

Want to learn more? Alacer’s AML experts will be attending the 19^th Annual AML & Financial Crimes Conference, being held March 16-19 at the Westin Diplomat in Hollywood, FL. Send an email to me at Richard@alacergroup.com to arrange a chat.