Japanese regulator 'could consider tougher penalties' for failures

1 July 2009

Japan's financial regulators may have to introduce tougher penalties for financial institutions that fail to properly adhere to data protection and anti-money laundering requirements, the country's finance minister has warned.

Kaoru Yosano made his comments following a data breach at Japan's largest bank, Mitsubishi UFJ Financial Group (MUFG), which saw a former employee of its brokerage unit allegedly steal records relating to approximately 1.5 million customers, Bloomberg reports.

Regulator the Financial Services Agency ordered the institution to overhaul its internal security following the incident but the minister said tougher sanctions may be needed to provide banks with a greater incentive to deter such episodes in the future.

Last month, MUFG president and chief executive Nobuo Kuroyanagi said the company would undertake a group-wide review of its internal controls in light of the data breach.

In a separate case, Citigroup has been ordered by Japanese regulators to suspend its marketing of individual banking services after its internal controls were found to be inadequate for preventing money laundering.

"Unless financial institutions properly monitor for money laundering, we won't be able to discover fraudulent money flows," Mr Yosano said.

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