Japan's Financial Services Agency is considering onsite inspections of regional banks with insufficient measures to prevent money laundering, Kyodo News reported June 6, citing sources with knowledge of the plan.
The financial watchdog will take administrative action, such as issuing a business improvement order, on financial institutions that fail to enhance anti-money laundering efforts, the sources said.
Regulators in Japan have already asked financial institutions that handle overseas money transfers to check for suspicious customer transactions. In March, the FSA ordered banks to report on their anti-money laundering efforts.
Several small and medium-sized enterprises that lack experience in overseas remittances are believed to have processed transactions potentially linked to money laundering, the sources added.
The stricter checks would come ahead of an examination of Japan's anti money-laundering efforts in 2019 by the Financial Action Task Force, an international standard-setting body for promoting measures against money laundering and terrorist financing.
