Citi Japan holds retail for laundering concerns
The Financial Services Agency, Japan’s financial regulator, ordered Citibank to stop all promotional sales activities as punishment for lax money laundering controls. The bank may do business with individuals that contact the bank themselves.
The Japanese regulator said it has found “fundamental problems” with Citibank’s systems for detecting and monitoring suspicious transactions, including money laundering. The first order from the FSA to Citi to fix this was back in 2004. Citi’s progress since then was apparently not sufficient. The bank also lacked an adequate system to control dealings with “anti-social forces,” a Japanese euphemism for its organized crime groups.
“Despite the fact that the board of directors and management … were responsible for the execution of the business improvement order, they lack an understanding of the rules applied in Japan, such as laws and regulations, and an awareness of improvement,” the FSA said in a statement.According to WSJ, the retails operations are at the core of Citi’s presence in Japan following the sale of some other major operations in Japan, making this punishment a serious setback for Citibank. The financial consequences however are deemed to be minimal since the retail sales during summer months usually are slower.
