Japan's FSA ups scrutiny of banks on steps to fight dirty money -sources


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By Sumio ItoTOKYO, April 21 (Reuters) - Japan's financial regulator has
stepped up scrutiny of banks on their measures against money
laundering and terror funding, ahead of checks by a global body
for fighting illicit finance, several people with knowledge of
the matter told Reuters.
    The Financial Services Agency (FSA) sees as patchy Japanese
banks' measures for fighting criminal abuse of the financial
system and is increasingly concerned that without an appropriate
response international trust in the system could be shaken, they
said.
    The FSA is surveying the banks and will pull together
results this summer, and then seek an industry-wide bolstering
of standards before the Financial Action Task Force (FATF)
evaluates Japan's overall performance in 2019.
    The regulator's move comes as FATF, which sets standards on
combating money laundering and terror funding, looks to identify
and disrupt the funding of terrorist groups such as Islamic
State - a top priority for the Paris-based organisation.
    In its evaluation of Japan - part of its periodic assessment
of its 37 members - FATF will look at the effectiveness of its
laws on money laundering and terrorist funding, and judge
whether an institutional framework for supporting efforts
exists.
    FATF is finding other countries lacking, with only two of
the 11 countries already evaluated having passed.
    In 2014 Japan was criticised by the FATF for having failed
to introduce necessary anti-money laundering and counter
terrorist financing laws, with the government enacting new
legislation in response in November last year.
    The FSA, which began its survey in March and has started
collecting responses, aims to gauge banks' awareness of money
laundering and financing of terrorist groups. It will zero in on
how banks have responded to legal changes designed to combat
money laundering and financing of terrorism, the sources said.
    An FSA spokesman declined to comment.
    FATF was established in 1989 to combat money laundering. Its
mandate later grew to developing efforts against the financing
of terrorism, which now form its top priority.
    The FSA has been at the centre of Prime Minister Shinzo
Abe's push to buttress global faith in Japan's economy. It has
looked previously to raise regulatory standards in areas from
corporate disclosure to audit quality.

 (Reporting by Sumio Ito; Additional reporting by Takahiko Wada;
Writing by Thomas Wilson and Sam Nussey; Editing by Muralikumar
Anantharaman)
 ((T.Wilson@thomsonreuters.com; 81-3-6441-1598; Reuters
Messaging: t.wilson.thomsonreuters.com@reuters.net))

Keywords: JAPAN REGULATORS/MONEYLAUNDERING



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