Cooperation between industries is deepening to strengthen money-laundering countermeasures. Financial institutions will utilize data obtained by power companies to track movements of bank account holders, and they will work together to develop a system that detects illegal transactions. The precious metals industry has implemented anti-fraud measures such as stricter processes for identifying sellers, with one major dealer halting purchases of foreign products altogether. These steps are being taken to address issues brought to light by an international organization, the Financial Action task Force (FATF). Japan essentially failed to meet the international standards in the FATF review announced in August.
In particular, the FATF review pointed out the inadequacies of ongoing customer relationship management, which routinely monitors the actual status of customer transactions. The FATF requested that Japanese financial institutions check transactions of bank accounts, not only at the time of the account opening, but also continuously afterwards to see whether the accounts are used by actual owners.
At present, the banks send postcards to verify the whereabouts of the account holder. Now there is a move to improve the efficiency of the process through collaboration with power companies. If equipment at the account holder’s address registered with the bank doesn’t show any activity, the accounts linked to that address will be subject to more in-depth scrutiny, which will enable the bank to identify suspicious transactions at an early stage.
Also, a system involving multiple financial institutions is being developed to detect suspicious movements of money in advance. In this system, each bank feeds a large amount of data on transaction details and customer information into artificial intelligence (AI), and the bank staff analyze suspicious transactions in detail. The Japanese Bankers Association and the NEC are conducting demonstration experiments until March 2022 to study the practical application of the system.
The Financial Services Agency will launch a working group as early as October to develop a system for handling personal information and other items. Local banks and other institutions that lack resources to build a system on their own will be encouraged to use this system.
Additionally, the government has established a cross-agency team tasked with strengthening anti-money laundering measures. Applying harsher penalties for money laundering are also being considered. (Abridged)