RBI imposes monetary penalty on Citibank N.A.

Case Brief

The RBI imposed a monetary penalty of ₹5 crore on Citibank N.A. by order dated November 2, 2023. The penalty was based on findings from the bank’s Statutory Inspection for Supervisory Evaluation (ISE 2021), which showed that the bank did not credit eligible amounts to the Depositor Education and Awareness Fund in time, paid commission to certain staff members, and outsourced the monitoring and disposal/closure decision-making function for AML alerts to a Group company. RBI held that these actions amounted to contravention of Section 26A and Section 10(1)(b)(ii) of the Banking Regulation Act, 1949, and non-compliance with RBI directions on outsourcing of financial services and KYC. The RBI clarified that the penalty was for deficiencies in regulatory compliance and did not pronounce on the validity of any transaction or agreement with customers.