Citibank Indonesia failed to perform a regular rotation of their employees, including one who is now implicated in an embezzlement scandal.
Senior relations manager Inong Malinda, aka Malinda Dee, allegedly embezzled at least Rp 17 billion (US$2 million) in client funds that she managed.
According to Citibank vice president of customer services Hotman Simbolon, Bank Indonesia had instructed them to perform a regular shakedown.
The rotations are connected to switching managers who are responsible for certain client portfolios.
However, Citibank failed to conduct the shakedown because their clients were accustomed to certain relationship managers and refused the switch, Hotman said.
"The account holders often tell me that they don't want to be transferred [to other relationship managers]," he said
He added that this was one of the contributing factors to the crime that Malinda committed, in addition to the collusion with the head teller.
"Since this case involves a transfer, the first person responsible for control is the teller," he said. "The one responsible for the teller is the head teller."
Bank Indonesia governor Darmin Nasution said that Citibank had failed to "implement the process of employee rotation".
In addition, Citibank had failed to have adequate supervisory control over subordinates, dual control as prescribed by procedures and to conduct transaction confirmations with clients, he said.
Melinda's supervisor, was not present at a House of Representatives meeting on Wednesday between BI, Citibank and Commission XI members overseeing banking.
"Towards these violations, Bank Indonesia has performed supervisory actions," Darmin said.
These actions include summoning Citibank's chief country officer, requesting the bank to improve internal controls and freezing new applications for Citibank Gold, he added.
"Besides that, Bank Indonesia has renewed the risk profile and health levels [of Citibank]," he said, adding that BI would conduct further checks to evaluate the internal controls of the bank.
