Citigroup 'faces $600,000 fine'

12 October 2009

Citigroup is to pay a fine of $600,000 over claims it helped overseas customers avoid paying taxes on dividends, according to an unnamed media source.

Investigators at the Financial Industry Regulatory Authority are set to make the fine public today after allegations that Citigroup assisted their clients to escape paying billions of dollars of US taxes, reports the Financial Times.

The scheme is alleged to have worked by the customer selling stock to the bank during a period of dividend payments.

Citigroup would then pay the customer an income equivalent to the dividend and any increase in the share price.

The bank has refused to comment on the allegations.

In 2006 Citigroup paid the Internal Revenue Service $24 million over allegations of the withholding of dividend taxes.

The beleaguered bank has been badly hit during the financial crisis and is expected to announce its sixth quarterly loss in the space of two years soon.

Industry analysts told Bloomberg that they estimated the bank had lost more than $2.5 billion in the third quarter of 2009.

By Asim Shah

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