Japan’s FSA beefs up anti-money laundering measures

TOKYO — The Financial Services Agency has made anti-money laundering measures a top priority in its annual policy report as it braces for inspections by an intergovernmental watchdog next spring.

The latest guidelines, which outline steps the regulator is taking over the next 12 months, highlight measures against money laundering and terrorism funding, including on-site inspections of financial institutions.

The Financial Action Task Force has previously criticized Japan for insufficient legal safeguards against money laundering. The government hopes to clean up its tarnished image, particularly as it will host the Group of 20 summit next year.

Financial authorities around the world are taking steps to prevent countries under United Nations sanctions, such as North Korea, from conducting prohibited transactions. Japan wants to avoid becoming a target for international criticism again.

The report urges financial institutions to take steps to halt money laundering, requiring them to identify and analyze the risks associated with certain types of transactions, such as the stated purpose of cross-border cash transfers, customer attributes and countries of origin or destination.

In February, the FSA issued anti-money laundering guidelines and directed smaller financial institutions such as regional banks and shinkin banks to conduct emergency inspections. To close the loopholes on overseas remittances, the policy requires institutions to come up with plans to train staff.

“Our inspections have shown that many financial institutions still fall short of requirements,” said an FSA official. “Stopgap measures will not be enough, and regional banks should put anti-money laundering measures at the top of their agenda,” said another senior FSA official.

Japan is not the only country to have run into problems over money laundering. Danske Bank, Denmark’s largest bank, faces allegations that its Estonian unit illegally remitted as much as $230 billion, forcing CEO Thomas Borgen to resign.

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