The Reserve Bank of New Zealand has issued a warning to Citibank NZ for failing to provide originator information in thousands of international wire transfers to beneficiary institutions. This is a requirement under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009.
According to a press release by the Reserve Bank of New Zealand, approximately 64,000 transactions omitted the required originator information. These transactions took place between January 2017 and July 2020, and again from November 2021 to April 2022. The Reserve Bank attributed this issue to control deficiencies at Citibank NZ and its failure to adequately apply and test control measures for automated payment rules. Consequently, the true identities of the originators were not included in the transactions, preventing recipient banks from identifying their true origins.
The Reserve Bank clarified in its press release that these failures were not intentional on Citibank NZ's part. It added that Citibank NZ self-reported the problem upon becoming aware of it and has cooperated with the subsequent investigation.
Reserve Bank’s Director of Enforcement and Resolution, Kerry Beaumont, emphasized in the press release that this formal warning underscores the importance of payment transparency when multiple parties are involved in a payment chain. Beaumont also stressed on the necessity for systems assurance to regularly test systems before issues become systemic.
The Reserve Bank pointed out in its press release that these failures by Citibank NZ have compliance implications for banks that received these funds. As per the Reserve Bank, prescribed transaction reporting serves as a source of financial intelligence to prevent money laundering. The Reserve Bank plans to be in contact with affected reporting entities regarding this matter.