MUFG Bank, a unit of Mitsubishi UFJ Financial Group, plans to terminate overseas remittances made at bank branches bypassing account-based banking. The Japanese banks’ anti-money laundering measure is in preparation for the Financial Action Task Force (FATF) review scheduled for this year.

Other banks are likely to follow MUFG Bank in an effort to strengthen Japan’s overall anti-money laundering efforts. In its 2008 review, the FATF found that their anti-money laundering efforts were inadequate.

Japan’s banks risk restrictions on transactions and overseas remittances and settlements if their anti-money laundering steps are again found inadequate in FATF’s review. Transactions for cross-border trade can also be affected if FATF puts restrictions.

Regional banks such as Shimane Bank have already withdrawn all sorts of foreign money transfer services.

“Japan is a rare country where the number of crimes is small, which led to the delay in efforts to fight money laundering,” a senior bank official was quoted as saying by the Japan Times.

Japan’s National Police Agency, however, suspects says that suspicious transfers of illegal financial proceedings are increasing at Japanese banks, increasing the need for aggressive measures to tackle money laundering.

The anti-money laundering steps taken by the banks include urging foreign students and expatriate workers to close their bank accounts when they move out of Japan.

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