FEATURE: Banks bolstering measures against money laundering

TOKYO (The Japan News/ANN) - As part of efforts to clamp down on money laundering, financial institutions are bolstering checks and confirming additional details when individuals and companies open bank accounts and send money overseas.

As part of efforts to clamp down on money laundering, financial institutions are bolstering checks and confirming additional details when individuals and companies open bank accounts and send money overseas.

 The Financial Action Task Force, an international organization, is scheduled to make a wide-ranging evaluation of Japan’s steps to counter money laundering this autumn. As this date approaches, financial institutions are stepping up their countermeasures due to concerns that if the FATF decides Japan’s handling of this issue is insufficient, it could lead to difficulties such as delays in international remittances made through Japanese financial institutions.

 On Wednesday, Resona Bank and Saitama Resona Bank stopped over-the-counter international cash remittances. This step was taken because the difficulty in confirming the identity of the remitter and the reason for sending the money meant there was a risk these transfers could be used for improper purposes.

 MUFG Bank and Mizuho Bank will stop offering international cash remittances from around June. Sumitomo Mitsui Banking Corp. also is considering similar steps.

 Japan Post Bank also will halt international cash transfers from April. Even when an overseas remittance is made through a bank account, if the recipient is a relative abroad, the sender will need to provide documentation such as a certificate of residence that proves the family relationship.

 From June or later, many banks are expected to increase the number of details companies and individuals must provide when they open accounts at financial institutions or send large sums of money overseas. The banks will confirm information such as the sender’s occupation and nationality, and whether the money is being sent to a country subject to international sanctions.

 Japanese financial institutions have lagged significantly when it comes to combatting money laundering.

 In February, MUFG Bank branches in the United States were told by U.S. authorities that they had identified deficiencies in the branches’ internal controls with regard to anti-money laundering programs.

 Last year, it was discovered that users of Saitamaken Shinkin Bank, which is based in Kumagaya, Saitama Prefecture, had sent a total of about ¥1.9 billion to shady overseas bank accounts. It is said that Ehime Bank also was used to fraudulently send more than ¥500 million to North Korea via Hong Kong.

 The FATF, a Paris-based organization comprising financial and police authorities from Japan, the United States and Europe, said in an evaluation report that started in 2008 that Japan ranked 18th out of 27 nations — including the United States and European countries — with regard to the level of countermeasures taken against money laundering by financial institutions and domestic law. Japan was among those ranked the lowest among the seven advanced nations.

 This autumn, the FATF will start a new extensive assessment of Japanese financial institutions. If this evaluation uncovers a large number of deficiencies, there are fears the international credibility of Japanese financial institutions could be tarnished and it could become more difficult to make overseas remittances and fund settlements.

 The FATF will examine issues such as increasingly used virtual currencies and online remittance services, so addressing these matters is a pressing task.

 “Japan has a very low awareness of the risk that money could be funneled to terrorists,” said Chiharu Yamazaki of KPMG Azsa LLC, an audit corporation. “Financial institutions should be more conscious of the norms on this issue, and users also should think seriously about the importance of clamping down on money laundering.”

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