06/05/19

JAPAN: Banks to halt overseas transfers that bypass bank accounts.

As published on regulationasia.com, Monday 6^th May, 2019.

In preparation for this year’s FATF review, Japanese banks will reportedly terminate counter services for overseas remittances that bypass bank accounts.

Japan’s MUFG Bank will terminate overseas remittances made at the counter of branch offices that bypass bank accounts next month, reports the Japan Times.

Other banks are likely to follow suit, the report said, in a bid to strengthen efforts to prevent money laundering in preparation for a FATF (Financial Action Task Force) review scheduled for later this year.

In its 2008 review, the FATF concluded that measures taken by the Japanese government and financial institutions were insufficient.

A poor evaluation could result in Japanese banks being subject restrictions on international transactions, settlements and remittances, impacting cross-border trade, the report said.

Japanese regional banks, such as Shimane Bank, have been withdrawing all types of overseas fund transfer services, used less frequently in smaller cities and therefore less profitable.

The report also noted that foreign students and workers in Japan will be required to close their bank accounts when they return home, amid reports that many such accounts were sold for extra income and used in money laundering and remittance fraud.

In related news, Japan’s second largest lender Sumitomo Mitsui Financial Group last month was ordered by the Federal Reserve to fix weaknesses at its US banking unit’s AML systems. The Fed had said weak controls were detected at a New York branch.