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Japan: Agency to penalize Citibank for 3rd time
Publicado el October 3, 2011

The Daily Yomiuri.- The Financial Services Agency will impose administrative sanctions on Citibank Japan Ltd. for taking insufficient measures to prevent money laundering, it has been learned. This is the third time Citibank Japan, a locally incorporated bank of Citigroup Inc. of the United States, will be penalized, following administrative orders imposed in 2004 and 2009. This time, the bank may be ordered to suspend business for a certain period of time in a bid to force it to make organizational improvements. The sanctions may be imposed sometime this month. During inspections of Citibank Japan that were completed in June, the banking industry watchdog found legal violations, including insufficient explanations to customers when it sold them financial products, according to sources.


The FSA also found insufficient measures had been taken by the bank against money laundering, a problem that was emphasized in a previous administrative order. The agency informed Citibank Japan of the results of its inspection at the end of August and called on the bank to report on its business management system and other measures based on Article 24 of the Banking Law. The FSA will decide on the penalty after assessing the report the bank is expected to submit early this month. In 2004, the bank's four offices in Japan, including a branch in central Tokyo, had their licenses revoked because its private banking division had helped wealthy clients open accounts for the alleged purpose of money laundering. The bank's private banking division withdrew from Japan later that year.


In June 2009, the bank was ordered to suspend for one month the solicitation of new private customers for failing to report several hundred accounts suspected to have been opened to launder money. Darren Buckley, president and chief executive officer of Citibank Japan, apologized at a press conference that the bank's audit system had failed to detect antisocial elements. Citibank Japan obtained a banking license in June 2007 so it could operate like ordinary Japanese banks. As of June this year, the bank has assets totaling about 3.5 trillion yen, equivalent to those held by large local Japanese banks.
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