The Commodity Futures Trading Commission (CFTC), the commodities market regulator, has taken action against Citibank and Citigroup Global markets Limited. The CFTC stated that it filed and settled charges for failure to comply with certain requirements in its swap offerings.
The press release states that Citibank and Citigroup failed to report Legal Entity Identifier (LEI) to the swap repository as required. The regulator also noted other supervision features that it failed to comply with.
Lack of Compliance
This is not the first compliance issue faced by Citi. In September 2017, the CFTC stated that Citibank and Citigroup failed to report LEI data for swap transactions properly. At the time, the regulator stated that Citi violated various regulations such as setting up electronic systems, providing the necessary procedures and correcting any errors in the LEI data reported to the SDR.
At the time, the regulator stated that Citi’s mistakes were in its failure to conduct the required supervisory duties related to LEI swap data reporting. Citi was ordered to pay $550,000 as a civil monetary penalty in 2017, and later the CFTC issued a cease and desist order against the firm.
However, the recent order is different from what was issued by the regulator on September 28. The current orders stated that Citi had failed to report LEIs for swap transactions and fulfill its supervisory duties for the second time. The current penalty is attributed to reporting failures from 2013 to November 2019.
Moreover, the CFTC stated that Citi wrongly reported LEIs for specific swaps and that it “reported through a third-party reporting service provider by reporting the counterparty identifier as ‘Name Withheld’ rather than reporting a valid LEI or a Privacy Law Identifier compliant with available CFTC no-action relief.”
Ordered to Pay $1M in Penalties
The order issued on September 27 stated that Citi was required to pay $1 million in civil penalties. Another cease and desist order was also issued against Citibank and Citigroup.
The CFTC Acting Director of Enforcement, Vincent McGonagle, has stated that the recent action demonstrates that the regulator will “vigorously pursue swap dealer registrants that fail to meet their reporting obligations and violate CFTC orders.” He also added that “Accurate swap data reporting is essential to the fulfilment of the CFTC’s regulatory mandates, including monitoring systemic risk and preventing market abuse.”
The CFTC has been vigilant when it comes to compliance. The regulator recently charged a Texas resident and other companies in Costa Rica for several dealings related to forex and commodities fraud.