In an unprecedented incident last year, an employee at Citigroup inadvertently initiated a fund transfer that would have made a client the wealthiest person in history. This extraordinary error, which occurred in April, resulted in a staggering $81 trillion being credited to a customer’s account instead of the intended sum of just $280, as reported by the Financial Times.
To put this colossal amount into perspective, it's important to note that Citigroup itself has a market capitalization of approximately $150 billion. Comparatively, the entire U.S. GDP stands at around $27 trillion, while the GDP of the European Union is roughly $17 trillion and China’s GDP is close to $18 trillion. The erroneous fund transfer represented more money than the combined economies of many developed nations, raising questions about the bank's internal controls and oversight.
While the exact source of the funds remains unclear, it is confirmed that the customer did not retain any of the funds, as they never existed in reality. Furthermore, it is uncertain whether the employee responsible for this monumental error retained their job following the incident. In communications with the Federal Reserve and the Office of the Comptroller of the Currency, Citigroup referred to the situation as a "near miss," a term that seems to understate the gravity of the mistake.
According to the Financial Times, a “near miss” refers to incidents in the banking sector where a mistake occurs, but the bank is able to recover the funds before any damage is done. In Citigroup's case, no funds ever left the bank. The report highlighted that Citigroup experienced ten near misses of $1 billion or more last year alone, a slight decrease from 13 the previous year. This suggests that such incidents are somewhat common, yet remain largely unreported since they do not require disclosure to regulators.
Fortunately, automated systems at Citigroup played a crucial role in preventing the execution of this impossible transfer. Initially, two employees overlooked the giant outflow of funds, but a third employee identified the issue around 90 minutes after the transfer was initiated. In a statement to the New York Times, Citigroup explained, “Despite the fact that a payment of this size could not actually have been executed, our detective controls promptly identified the inputting error between two Citi ledger accounts and we reversed the entry.”
This incident is not an isolated case for Citigroup. The bank has a history of significant blunders, including a major accounting error two years ago that triggered a substantial selloff of stocks in Europe, leading to a loss of around $322 billion in value. For this error, Citigroup faced a fine of $79 million, highlighting the potential consequences of such financial missteps.
As the financial industry continues to evolve, the importance of robust internal controls and rigorous oversight cannot be overstated. The $81 trillion transfer incident serves as a stark reminder of the potential pitfalls that can arise in the banking sector, and the need for constant vigilance and improvement in financial processes.
Gizmodo has reached out to Citigroup for further comments and will provide updates should there be a response from the bank.
