PRA places £44 million fine on Citigroup
27 November 2019 London
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The Prudential Regulation Authority (PRA) has fined Citigroup’s UK operations £44 million for failings in their regulatory reporting governance and controls, but one industry expert has said that more digital regulatory regimes could help with these kinds of issues.
According to the Bank of England, between 19 June 2004 and 31 December 2018, Citigroup’s UK regulatory reporting framework was not designed, implemented or operating effectively, which led to them failing to submit complete and accurate regulatory returns to the PRA.
Commenting on this, Giles Nelson, CTO, financial services at MarkLogic, noted that the root of the problem, according to the Bank of England, was Citigroup's inadequate data management and governance.
Nelson observed that the bigger picture is that, as the number of legislative initiatives that compliance teams need to stay on top of grows, it is becoming increasingly difficult for firms to stay within the rules, which is when things go wrong.
Organisations like Citi, suffer in this respect, Nelson articulates, because of their sheer size and complexity.
He explained: “The data they need to report on liquidity and capital requirements need to be accessed from a myriad of different business areas and data systems within the bank, but Citi’s systems to bring this data together and construct an overall view of it, were obviously lacking.”
“Hence, regulators like the PRA, Financial Conduct Authority (FCA) and US Commodity Futures Trading Commission are putting pressure on firms to move towards more digital regulatory regimes where regulatory requirements become machine-readable and ultimately executable.”
For this vision to be realised, organisations such as Citi need to put data at the heart of their regulatory efforts, Nelson advised.
“And it’s not just the data itself – it’s understanding its provenance and lineage – how it’s moved within an organisation, who and what have altered it. Organisations should aspire to create a regulatory data hub, where all information relevant to dealing with regulatory reporting is logically available in one place,” Nelson concluded.
This fine by the PRA follows on from a series of issues with regulatory reporting from Goldman Sachs, UBS, Standard Chartered and others who were all fined by the FCA.
Citi did not immediately respond to questions on the matter.
According to the Bank of England, between 19 June 2004 and 31 December 2018, Citigroup’s UK regulatory reporting framework was not designed, implemented or operating effectively, which led to them failing to submit complete and accurate regulatory returns to the PRA.
Commenting on this, Giles Nelson, CTO, financial services at MarkLogic, noted that the root of the problem, according to the Bank of England, was Citigroup's inadequate data management and governance.
Nelson observed that the bigger picture is that, as the number of legislative initiatives that compliance teams need to stay on top of grows, it is becoming increasingly difficult for firms to stay within the rules, which is when things go wrong.
Organisations like Citi, suffer in this respect, Nelson articulates, because of their sheer size and complexity.
He explained: “The data they need to report on liquidity and capital requirements need to be accessed from a myriad of different business areas and data systems within the bank, but Citi’s systems to bring this data together and construct an overall view of it, were obviously lacking.”
“Hence, regulators like the PRA, Financial Conduct Authority (FCA) and US Commodity Futures Trading Commission are putting pressure on firms to move towards more digital regulatory regimes where regulatory requirements become machine-readable and ultimately executable.”
For this vision to be realised, organisations such as Citi need to put data at the heart of their regulatory efforts, Nelson advised.
“And it’s not just the data itself – it’s understanding its provenance and lineage – how it’s moved within an organisation, who and what have altered it. Organisations should aspire to create a regulatory data hub, where all information relevant to dealing with regulatory reporting is logically available in one place,” Nelson concluded.
This fine by the PRA follows on from a series of issues with regulatory reporting from Goldman Sachs, UBS, Standard Chartered and others who were all fined by the FCA.
Citi did not immediately respond to questions on the matter.
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