NEW YORK, Sept 27 (Reuters) -

Citigroup ( C/PN ) warned some employees about fraud and unethical

behavior and said it is considering tighter scrutiny on work

done by contractors to ensure the company is billed accurately,

according to a memo seen by Reuters on Friday.

Citi has struggled to fix weaknesses in its controls and

risk management. It was fined $136 million by regulators in July

for making insufficient progress on regulatory punishments

dating back to 2020.

"Citi has zero tolerance for fraudulent and unethical

behavior from our employees, non-employees and suppliers,"

according to the internal Citi memo seen by Reuters.

"Citi is looking at heightening our controls on how we

source work," to ensure suppliers match its needs and that they

are paid appropriate rates for the hours they work, the memo

showed.

The bank declined to comment, and the memo provided no

specific details on why it was being sent.

The memo was sent by Scott Sigal, Citi's global head of

procurement and third party management, and Erika Federico, its

global head of non-employee staffing.

The lender also asked staff to report any potential

misconduct or breaches of its policies. Suspected misuse of Citi

resources for personal or professional gain would be

investigated, it said.