Aeon Bank Punished: Money Laundering of Criminal Proceeds Cannot Be Left Unaddressed

Editorial

14:59 JST, January 11, 2025

Society has entered an era in which people who have never met before connect with each other through social media and form criminal groups. Financial institutions must take thorough measures to stop money laundering so that funds obtained through crimes do not go unchecked.

The Financial Services Agency has issued a business improvement order to Aeon Bank, which is under the umbrella of major retailer Aeon Co., on the grounds that the bank’s measures to prevent money laundering were inadequate.

The bank has been found to have neglected to check whether at least 14,000 transactions detected in its monitoring system fell into the category of suspicious transactions, such as those involving large amounts of money, during the periods from June to November 2023 and from July to September 2024.

The bank is also said to have failed to report suspicious transactions to the agency.

Money laundering is a method used to make it difficult to trace the origin or true owner of funds gained through crimes so as to avoid detection by law enforcement agencies.

Financial institutions, which play a role of transferring money and are considered as an infrastructure, have a heavy responsibility to act as a barrier against money laundering. Sloppy management is not something that can be overlooked. The bank’s management should take the lead in thoroughly implementing measures to prevent a recurrence.

In recent years, the importance of measures to prevent money laundering has been increasing. This is because public concern is increasing due to the prevalence of crime groups categorized as “tokuryu” — or anonymous and fluid criminal groups whose members are connected via social media and repeatedly come together and disperse — and “dark part-time jobs,” which recruit people through social media to commit robberies or other crimes.

In a case uncovered by the Osaka prefectural police last year, a criminal group had its collaborators set up a number of shell companies and open about 4,000 corporate bank accounts.

The group then transferred at least ¥70 billion, gained from special fraud scams, as well as funds for illegal online betting, to overseas and other accounts. If funds gained from crimes flow overseas, it becomes more difficult to track them down through investigations, and there is a concern that crimes will continue to spread.

Japan also needs to take seriously that it has been criticized by international organizations for its lax anti-money laundering measures. In its 2021 evaluation report, the intergovernmental Financial Action Task Force argued that small and midsize financial institutions in Japan are not doing enough to prevent money laundering.

It is also predictable that criminal groups will target financial institutions with weak countermeasures. Compared to major banks, financial institutions, like Aeon Bank, that are established by business operating companies are said to be facing difficulties regarding the allocation of sufficient labor and funds to strengthen countermeasures. Japan must not become a place where money is easily laundered.

The Japanese Bankers Association is working to create a mechanism for promptly sharing information on accounts suspected of being used for illicit purposes. It is important for the industry as a whole to strengthen countermeasures, including detecting suspicious transactions through the use artificial intelligence.

(From The Yomiuri Shimbun, Jan. 11, 2025)