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Last Updated: Friday, 20 February, 2004, 17:27 GMT
Japan raps bank for 'laundering'
Standard Chartered branch
Japan's financial watchdog has punished the Tokyo branch of UK-based Standard Chartered Bank for failing to report an underground finance group's dealings.

The bank is banned from offering key services to new customers for a year.

The Financial Services Agency said the bank had failed to check on remittances made between the group and an overseas financial institution.

Japanese newspapers alleged the bank had in effect helped launder $56m for the yakuza, the Japanese mafia.


Standard Chartered acknowledged there had been a mob connection.

"We have a small custody business in Japan," a spokesman said, "and one of the international banks we handle business for has had among its customer base somebody with a link to organised crime."

The bank had been simply acting on the instructions of the overseas institution, he said - whose responsibility it had been to check on the identity and credentials of those taking part.

But the FSA said the bank had failed to report what were suspicious transactions, and had also been found to have weak internal controls despite several opportunities to review its systems.

The papers, meanwhile, went further.

The Yomiuri Shimbun - Japan's biggest-selling daily - said Standard Chartered had cashed 6bn yen ($55m; 30m) in bearer bonds and sent the proceeds to a European bank branch in Hong Kong.

The money, the paper said, was linked to to the Yamaguchi-gumi, one of the most prominent crime syndicates in Japan.

The yakuza remain powerful in Japan, with strong ties to both law enforcement, politics and legitimate big business.

Until recently, most gangs openly maintained offices in the business districts of major Japanese cities.

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