American City Bank Group’s $81 Trillion Error: A Case Study in Operational Oversight
In a startling operational error, the American City Bank group mistakenly credited a customer’s account with $81 trillion instead of the intended $280. This incident, which took place last April but has only recently come to light, highlights significant deficiencies in the bank’s internal controls. The erroneous transaction was initiated before the payment employee or their supervising official were notified of the mistake. Fortunately, a third employee identified the anomaly in the bank’s accounts approximately 90 minutes into the transfer process, prompting the bank to halt the transaction hours later.
According to internal reports reviewed during this investigation, the bank averted further complications by acting quickly, preventing actual asset withdrawal before the transfer was stopped. These findings were disclosed to the U.S. Federal Reserve, which monitors banking activities to ensure compliance and minimize risk.
This incident is not isolated. The internal documentation indicates that the bank experienced similar errors ten times in the previous year, with a cumulative value of around $1 billion in erroneous transfers. These types of mistakes, referred to as “imminent errors” within the banking community, raise significant concerns about the bank’s operational integrity. Notably, these recurrent errors follow a critical incident five years ago, where City Bank accidentally dispatched $900 million to creditors of the Revlon Cosmetic Group. That error contributed to the resignation of then-CEO Michael Corbat and resulted in substantial fines from regulatory authorities such as the Federal Reserve.
This pattern of operational challenges at American City Bank underscores the need for rigorous internal controls and risk management strategies in modern banking operations.
