Japanese regulators delivered another slap to
Friday, telling it to wind down its trust operations next month.
The Financial Services Agency said Cititrust & Banking must halt all new operations by May 2. The agency said Citi obstructed inspections and engaged in improper deals.
The financial services agency alleged that Cititrust sold mutual funds despite being ineligible to do so and lied to inspectors about the practice,
Citi already had set plans to shut the unit down, but was planning to do so this fall. That decision came after Japanese regulators issued a scathing report last September that portrayed Citi's private-banking arm as a
glorified bucket shop that must be closed due to a pattern of legal transgressions.
The agency accused the private bank, which manages investments for rich people, of failing to implement safeguards against money laundering and misleading customers about financial risks. Citigroup acknowledged that management at its private bank had "failed to establish a culture that ensured ongoing compliance with laws and regulations."
The findings are another black eye for the world's largest financial service firms, which has been struggling to distance itself from its involvement with the Enron and WorldCom corporate scandals.
On Thursday, Citi closed at $46.27.