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Hi Blog. My old friend Fox in Japan writes in with a tale of being, as he puts it, “interrogated” at the bank for trying to send $500 overseas while foreign. And if you think the claim “while foreign” is a bit of an exaggeration, Debito.org has numerous records of racial profiling by Japanese banks for sending or receiving funds (or exchanging money) of even minuscule amounts (such as 500 yen).
New regulations, however, require a “risk-based approach” (which is, according to the Nikkei, recommended but not required), meaning the scale of “risk” depends on how much money the sender/receiver has in that bank. Or as the Nikkei puts it, “Consider a customer with a direct payroll deposit of 300,000 yen ($2,660) a month who receives 200 million yen from an overseas bank. The government would require that the bank not only follow up confirming the identity of the person withdrawing the funds, but also check the deposit history and what the cash will be used for.” Meaning that this is no longer a matter of transfer amount — i.e., a large transfer of 5,000,000 yen (later 2,000,000 yen) used to raise flags while smaller transfers didn’t. (Japan’s FSA Guidelines of 2018 mention no money amount whatsoever.)
The problem now becomes, without an objective minimum transfer amount to be flagged, that any “foreigner” can be arbitrarily deemed “risky” at any time simply by dint. It encourages racial profiling even further, in addition to what you already have at Japan’s hotels and other public accommodation, police instant ID checkpoints, and tax agencies. (See here too). More Embedded Racism. Debito Arudou Ph.D.
Interrogation at the Bank
By Fox in Japan, March 14, 2019
Dropped into Sumitomo Prestia in Kobe to send a telegraphic transfer to a friend in Africa. Completed the form two days ago, but the IBAN number was incorrect. Brought the corrected form in today. Under the category of “purpose,” I have written in “education fees.” The amount is $500. The following dialogue ensued. We are speaking in Japanese.
T: So this if for “gakuhi” (tuition)?
T: And who is the person receiving the transfer?
M: A friend.
T: Is this money for your own child’s education expenses?
T: Who is it for?
M: My friend’s child.
The bank teller’s face becomes pained. This the stereotypical expression indicating that a request will be rejected. My blood slowly starts to boil.
T: Have you ever sent money to this person before?
M: Yes, during the days of Citibank.
(Note: Prestia took over Citibank some years ago).
T: Well, things have changed since then.
M: Is that right?
T: Hmm, so you are not sending this for your own child?
T: Well, what is your relationship with this person.
M: He is a friend.
(More pained looks)
T: So, you are sending this to someone you know?
M: Yes, that’s what I just told you.
T: Is this a gift?
M: It might be.
T: Well, is it, or is it not?
M: What is the purpose of the question?
T: We have strict rules now about money being sent overseas.
M: Look, this is only $500, not five hundred man ($45,000). Listen. (My voice rises to crescendo, and the bank is extraordinarily quiet.) I was in your Osaka branch two days ago and they did not ask me any of these questions.
T: They didn’t?
M: No. I am not going to answer any more questions. Please call the branch manager!
A woman who has overheard this heated exchange conversation sneaks out of the office and the two begin to chat.
T: Please be seated.
The women exchange words and the original teller is on the phone.
Some ten minutes later, I am called back to the counter.
T: We just phoned the Osaka branch and they admit that they did not question the purpose of the transaction.
M: Is that right? (Ah soo desu ka)
T: The branch in Osaka said that you looked up some information on your computer when at the counter.
T: Well, we have very stringent rules now. If it is not for your own child, then….do you have an invoice “seikyusho” for the school expenses?
M: I certainly do not.
T: For your own children, sending money is OK, but for other’s children, it is …
M: Should I change the purpose to “living expenses then?”
(Note- I have frequently sent money overseas for this purpose-without any hassle.)
The teller looks bewildered.
T: Is it for living expenses, you said it was for educational expenses.
M: Yeah, that’s right.
In the end I succeeded and the money was sent.
I looked around at other customers in the bank, all Japanese, all of whom look very sunao. I wonder how they would react to the teller’s questions? Would they just say “shigata ga nai,” and walk away? And then forget that a bright young promising social science student in Malawi will soon be tossed out of college?
On the other hand, who knows if Japanese countrymen are even being interrogated like this? Has a directive been issued to hassle foreigners-all of whom are likely prone to money laundering?
But in fact, harassment it is. Financial transactions, both local and international, are regulated by strict laws. Not policies, but laws. My transaction was completed, and this means that it was perfectly legal. Apparently, Prestia has a policy of harassing customers (certainly foreign customers) who wish to send even even low amounts of money overseas.
Are all foreign clients of the bank potential money launderers? I urge all good people to stand up and question authority.
Sincerely, Fox in Japan
The referenced Nikkei articles, for the record:
BANKING & FINANCE
Japan to strengthen money-laundering guidelines
Banks adopting a risk-based approach to flag suspicious actions
NIKKEI ASIAN REVIEW, DECEMBER 08, 2017
TOKYO — Japan will issue new guidelines against money laundering in an effort to prevent funds from getting into the hands of terrorist and criminal organizations and to shake its reputation as weak on dirty money.
The Financial Services Agency is expected to announce the rules soon and implement them as early as January. Currently, Japan’s law preventing the transfer of criminal proceeds only says that suspicious transactions should be reported to authorities after the fact. Risk-based approaches are recommended but not required.
But the agency will now demand that financial institutions use a risk-based approach. Consider a customer with a direct payroll deposit of 300,000 yen ($2,660) a month who receives 200 million yen from an overseas bank. The government would require that the bank not only follow up confirming the identity of the person withdrawing the funds, but also check the deposit history and what the cash will be used for.
Although it is difficult to tell whether an account is related to criminal activity when first opened, this proactive approach identifies high-risk transactions early so that they can be continuously monitored.
The agency will verify that financial institutions are following the guidelines through questioning and on-site inspections. It will also order operational improvements to be made if it catches lax compliance that could invite money laundering.
The Financial Action Task Force, an intergovernmental body that combats money laundering, plans to examine Japan’s financial sector in 2019, the year before the Tokyo Olympics. Public and private institutions are cooperating to strengthen their prevention systems.
Japan’s FSA beefs up anti-money laundering measures
Financial regulator highlights steps taken ahead of visit by international watchdog
TAKERO MINAMI, Nikkei staff writer
NIKKEI ASIAN REVIEW, SEPTEMBER 28, 2018
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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