That’s a technicality. In the case of a loan payment, it isn’t Citibank’s money they are wiring, so you cannot just say “this was a loan payment, it’s just they keep it”.
Of course it’s acceptable that this caused confusion with the receiving party, but it does not mean they can keep it. It’s not the money from the party that was supposed to pay back the loan.
Please cite a law here. The money was owed, it may have been distressed and in default (so due immediately) the balance was paid.
Seriously, no lender is responsible for investigating at the level you are talking about - seriously, they do not need to figure out if you used your own money, the paying agent used their money, a title company paid out a title claim and used their money, an insurance company settled the debt as a result of a loss event etc.
Paying agents in other areas (securities / bonds) pay trillions a year - the system would not work if everyone was always having to worry that the "good funds" being used to pay debts were not good funds.
Citibank literally did make a loan payment - of the exact amount due in principal plus interest. That means that Citibank calculated the amount due, and sent the payment.
It can mean a computer calculated that (like some dashboard with multiple buttons and one that says “pay everything” which was accidentally pressed) and it did not take any conscious action for that to happen, so that doesn’t say anything about intent.
Of course it’s acceptable that this caused confusion with the receiving party, but it does not mean they can keep it. It’s not the money from the party that was supposed to pay back the loan.