Validation. Q1 2023 Redesign of credit‑risk models using machine‑learning techniques Improved probability‑of‑default (PD) forecast accuracy from 78 % to 92 % on the validation set. Q3 2023 Expansion of the firm‑wide stress‑testing framework (STF‑2023) Added 10 new macro‑economic scenarios, including climate‑related shocks; met OCC’s “forward‑looking” expectations. Q2 2024 Completion of the liquidity‑risk dashboard overhaul Integrated LCR, NSFR, and intraday liquidity metrics into a single real‑time view, satisfying OCC’s liquidity‑risk monitoring requirements. Q4 2024 Independent auditor’s report on risk governance Confirmed 100 % compliance with the 2024 consent‑order amendment milestones.

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What Prompted the OCC’s 2024 Consent‑Order Amendment for Citi?

• Regulatory pressure: In 2023 the Office of the Comptroller of the Currency (OCC) issued a consent‑order amendment to Citi after a series of supervisory findings highlighted gaps in credit‑risk modeling, liquidity‑risk measurement, and operational‑risk governance.
• specific deficiencies cited:
1. Inconsistent application of Basel III capital‑adequacy frameworks across the Global Banking division.
2. Weaknesses in the firm‑wide stress‑testing program, especially for emerging‑market credit exposures.
3. Lack of a unified data‑quality strategy for risk‑analytics platforms.
4. Objective of the amendment: Enforce corrective actions,set clear milestones,and require quarterly reporting to the OCC until satisfactory risk‑management standards were achieved.

Key Milestones in Citi’s Risk‑Management Overhaul (2022‑2024)

Why the OCC Decided to Remove the Amendment

1. Demonstrated risk‑management progress – The OCC’s 2025 supervisory review found that Citi had fully satisfied all quantitative and qualitative requirements outlined in the amendment.
2. Robust internal controls – Citi’s risk‑control self‑assessment (RCSA) scores rose from 73 % in 2022 to 96 % in 2024, exceeding the OCC’s threshold for “sufficient risk governance.”
3. Effective remediation reporting – Quarterly remediation reports were submitted on time, contained detailed variance analyses, and were independently validated by third‑party auditors.
4. Enhanced data governance – The new data‑lineage framework ensured traceability from source data to model output, addressing the OCC’s earlier data‑quality concerns.
5. Positive supervisory feedback – OCC supervisory staff highlighted Citi’s “proactive risk culture” and noted that the bank’s risk‑management framework now aligns with the latest Basel IV expectations.

Result: On 15 July 2025 the OCC officially removed the 2024 consent‑order amendment, declaring that Citi had achieved “sufficient risk‑management progress” and was in full compliance with all supervisory expectations.

Regulatory Implications for Other banks

• Risk‑culture accountability is now a de‑facto regulator‑wide requirement; banks should embed risk‑ownership into compensation structures.
• Data‑quality frameworks must provide end‑to‑end lineage; failure to do so can trigger prolonged consent‑order actions.
• Stress‑testing breadth must cover non‑traditional scenarios (e.g., climate, cyber‑attack) to satisfy OCC “forward‑looking” standards.
• Continuous monitoring of remediation milestones is essential; quarterly reporting must be both comprehensive and transparent.

Practical Tips for Banks Facing Similar Consent Orders

1. Map the amendment requirements – Create a detailed matrix linking each regulatory request to a specific internal action and owner.
2. Set SMART milestones – Ensure each corrective step is Specific,Measurable,Achievable,Relevant,and Time‑bound.
3. Leverage automation – Use workflow automation tools to track progress, send alerts for overdue tasks, and generate regulator‑ready reports.
4. Engage third‑party validators – Independent audits provide credibility and can accelerate regulator acceptance.
5. Communicate regularly with the OCC – Proactive briefings on progress help build trust and may reduce supervisory scrutiny.

Case Study: Citi’s Stress‑Testing Framework Revamp (STF‑2023)

• Objective: Address OCC concerns about limited scenario coverage and insufficient granularity in risk‑factor modeling.
• Approach:

* Integrated macro‑economic data from the IMF, World Bank, and private think tanks into a unified scenario library.

* Adopted a modular architecture allowing rapid addition of new stress scenarios without major system overhauls.

• Results:

* Execution time for a full‑bank stress test dropped from 72 hours to 18 hours.

* The model’s “tail‑risk capture” metric improved by 27 %, meeting the OCC’s “high‑confidence” benchmark.

• Regulatory impact: The OCC cited the STF‑2023 revamp as a primary factor in it’s decision to lift the consent‑order amendment.

Benefits of Removing the Consent‑Order Amendment

• Regulatory relief: Eliminates ongoing supervisory reporting obligations, freeing resources for strategic initiatives.
• Cost efficiency: reduces compliance expenses by an estimated $45 million annually (Citi’s internal cost‑benefit analysis).
• Reputational boost: Signals to investors and counterparties that Citi’s risk framework meets the highest supervisory standards.
• Strategic versatility: Allows the bank to reallocate capital toward growth‑driven activities, such as digital‑banking expansion and sustainable‑finance products.

Future Outlook: Ongoing OCC Expectations

• Continuous advancement: The OCC will conduct annual “risk‑management health checks” to verify that Citi maintains the standards achieved in 2024.
• Enhanced ESG risk oversight: Emerging guidance requires banks to embed environmental, social, and governance (ESG) risk metrics into the existing risk‑management ecosystem.
• Technology risk focus: With the rise of AI‑driven models, the OCC expects robust model‑risk governance, including explainability and bias mitigation controls.

Actionable next step: Citi’s risk‑management office should establish a dedicated ESG‑risk task force and update the model‑risk policy to address AI‑related concerns, ensuring compliance with the OCC’s evolving supervisory horizon.