Japan's financial regulator on Friday ordered the Japanese commercial banking unit of Citigroup Inc. to close four offices for violating banking laws.
The Financial Services Agency (FSA) said it would suspend operations at a branch in Tokyo and three satellite offices in Osaka, Nagoya and Fukuoka as of Sept. 29.
Citibank then has one year to terminate accounts at the branches, at which point their licenses will be revoked.
Regulators said they had found a long list of infractions, including failing to prevent suspected money laundering, lax screening of customer information and improper trading practices.
Citigroup apologized and said it would submit a comprehensive plan to address the problems by Oct. 22. It said six officers had left the company because of the problems, while eight have had their pay cut and others have been reprimanded.
"Citibank Japan sincerely apologizes for the problems identified in the FSA orders and is earnestly addressing the issues raised and working to prevent their recurrence," the company said in a statement.
Just three months ago, the FSA ordered Citibank to tighten its operations after it mishandled customer data earlier this year, losing details of Japanese customers' accounts.
More recently, the Securities and Exchange Surveillance Commission, which oversees financial markets under the FSA, said on Tuesday that Citibank had misled clients in a series of private bond placements last year.
Friday's punishment is the latest blow to Citigroup's international brand.
Officials at its European operation expressed regret earlier this week over a widely criticized 11 billion euro ($9 billion) trade in government debt in early August, which threw the bond market into turmoil while garnering an estimated 10 to 30 million euro profit for the bank.
In Japan, the U.S. conglomerate has been pushing actively into commercial and investment banking as well as the lucrative consumer finance market.
Its private banking operation is designed to take advantage of Japan's hefty $12.8 trillion in individually held financial assets.
Citigroup joins a growing list of financial firms, many of them foreign, that have drawn fire from Japanese regulators.
Earlier on Friday, the FSA ordered the Japanese unit of U.S. bond brokerage Cantor Fitzgerald to tighten its operations after regulators found the firm had engaged in irregular trading.
Other firms penalized recently include the Tokyo branch of UBS Securities, Deutsche Bank AG's Japanese trust banking unit, and Japanese online brokerage Monex Inc., now Monex Beans Holdings.
The FSA is also widely expected to file a criminal complaint against struggling banking group UFJ Holdings, the subject of an ongoing takeover battle, for obstructing a government inspection of its books last year.