Standard Chartered Slammed By Japanese FSA Over Lax Reporting

by Mary Swire, for LawAndTax-News.com, Hong Kong

23 February 2004

The Japanese Financial Services Agency (FSA) announced on Friday that it has suspended Standard Chartered Bank's Tokyo branch from opening new custody accounts after it emerged that the bank had allowed the transfer of suspicious funds from an "underground financial group", thought by the Japanese media to be linked to a yakuza crime gang.

Speaking to Reuters, a spokesman for Standard Chartered in London acknowledged that: "We have a small custody business in Japan and one of the international banks we handle business for has had among its customer base somebody with a link to organised crime."

In order to be permitted to offer new custody accounts, the bank must improve its legal compliance and internal controls, reporting to the FSA on March 22 with regard to action being taken to remedy the situation, and then again at three monthly intervals until the problem has been completely addressed.

The Japanese Ministry of Finance also announced last week that it will be preventing the Tokyo branch of the UK-based bank from participating in government bond auctions from February 27th, until the FSA lifts the penalties that it has imposed on the bank.

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