If your business does not have proper risk management controls in place, it could happen, just ask Citigroup. Recently a court ruled that Citigroup could not retrieve more than $500 million it mistakenly wired to ten investment firms since the firms applied the funds towards existing loans, and the firms were not aware of the mistake. Citigroup intended on making interest-only payments on the loans, amounting to $7.8 million, but because of the error of a Citigroup employee, instead the principal of the loans were repaid. Between this $500 million mistake, and the $400 million fine Citigroup was hit with in October, their record keeping, internal controls, and data governance needs to improve and should serve as a lesson to others the value of proper risk management.

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Derek Luster

Attorney at Law