Banks are to report suspicious transfers by JVs with North Korea: Japan’s Financial Services Agency

The move is aimed at ensuring Japanese lenders comply to norms prescribed by the Financial Action Task Force which will review Japanese lending practices in 2019. A critical report will place Japanese lenders out of the global banking network.

On Friday, according to two sources familiar with the matter at hand, Japan’s financial regulator has told all banks in the country to report any suspicious transfer of funds related to its 10 Japan-North Korea joint ventures.

Any suspicious transfers of funds as well as credit associations vis-a-vis these joint ventures should be reported to the Financial Services Agency (FSA).

According to Japan’s Mainichi newspaper, firms suspected of making such transactions include a manufacturer of pianos, a company that makes acoustic devices as well as a food sales company.

The FSA declined to comment immediately.

In 2017, the The United Nations Security Council passed a resolution banning new joint ventures involving individuals or groups from North Korea, as well as investments in existing enterprises.

Concerned that Japanese lenders are lagging behind in compliance to these anti-money-laundering and illicit finance procedures, the FSA is ramping up its efforts to detect suspicious transactions.

In 2019, Japan is set to face a peer review by the Paris-based Financial Action Task Force, a group created by G7 to fight illicit finance.

A critical report from the Financial Action Task Force could potentially result in Japan facing sanctions that could place Japanese lenders out of the global banking network.

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