Costs of anti-terror measures weighing on Japan regional banks

15-Sep-2021 Intellasia | JIJI | 5:02 AM Print This Post

Many regional financial institutions in Japan have decided to raise fees on overseas remittance in order to cover the growing costs of anti-terrorist financing measures.

Since the 2001 terrorist attacks on the United States, international efforts to monitor and combat money laundering and terrorist financing have been repeatedly strengthened. As a result, there has also been an increase in administrative workload put on banks, such as the burden of identity confirmation.

In October, Bank of Iwate and Kita-Nippon Bank, both regional banks, will raise charges for over-the-counter overseas remittance services from JPY 4,500 to JPY 7,500. Tohoku Bank and First Bank of Toyama are also planning similar markups.

Such moves by Japanese regional banks have been foreseen since the Financial Services Agency announced guidelines for financial institutions’ anti-money laundering measures in 2018. At least 10 banks have implemented or are planning remittance fee hikes this year.

“While we cannot quit our services as long as we receive remittance requests, we’re faced with more and more confirmation work that makes a lot of trouble,” a senior official at a regional bank in the Kanto area said, referring to checks on the sender’s identity, the receiver’s type of business and other information banks are required to acquire.

“Compared with domestic currency exchange services, overseas remittances require more stringent confirmation work,” said an official of a shinkin bank, a type of regional lender, in the Tokyo metropolitan area. “The work is not worth the costs.”

Regional financial institutions are hoping to cover related personnel and system costs with the charge hikes, even if only slightly. At the same time, they are faced with the need to continue to strengthen their measures. For example, the Financial Action Task Force, a global money laundering watchdog, said in a review report on Japanese efforts released in August that related measures and an understanding of the matter in Japan are insufficient, apparently referring to efforts made by Japanese regional financial institutions.

Among regional banks whose financial strength is weaker than that of major banks, some are on the verge of giving up on making a response on their own, sources familiar with the situation said. There are some regional banks and shinkin banks that have already stopped offering their own overseas remittance services and more financial institutions may follow suit.

The Regional Banks Association of Japan is considering establishing a common system for assisting member banks’ customer management operations, with the industry pressed to balance the continuation of banking services and the strengthening of anti-money laundering measures.

https://www.japantimes.co.jp/news/2021/09/14/business/anti-terror-regional-banks-fees/

 

Category: Japan

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