Wells Fargo & Co is under scrutiny as the Office of the Comptroller of the Currency (OCC) has mandated improvements in the bank's money laundering detection and compliance with international sanctions. Following this announcement on September 13, 2024, Wells Fargo's shares experienced a significant drop, falling as much as 6.5% before stabilizing to a 4.3% decline by 2:16 PM in New York. Notably, the OCC's agreement does not impose any monetary penalties, but Wells Fargo has committed to addressing the required corrective actions with urgency [0ed74201].
In a broader context, US banking giant Citigroup Inc is also facing regulatory scrutiny, particularly regarding its risk management practices. The Federal Reserve issued three Notices Requiring Immediate Attention (MRIAs) to Citigroup last year, urging the bank to enhance its assessment of default risk in derivative transactions. Internal audits revealed significant shortcomings in risk management and reporting to senior management, prompting Citigroup to work on two consent orders from 2020 related to these issues. As a result of these regulatory pressures, Citigroup's shares have dipped, raising concerns about its financial performance and operational costs [f0da2c07].
Additionally, a secret report from the OCC indicated that 11 out of 22 examined banks in the US, including Wells Fargo and Citigroup, have inadequate safeguards against operational risks, particularly in cybersecurity and employee errors. This report underscores the ongoing challenges within the banking sector as it grapples with rising operational risks and the potential for a broader financial crisis [f0da2c07].