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Japan’s finance ministry takes punitive action vs Mizuho over forex law

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November 26, 2021

TOKYO (Reuters) -Japan’s finance ministry on Friday ordered the banking arm of Mizuho Financial Group to take corrective measures over its breach of the country’s foreign exchange law and submit prevention measures by mid-December.

Mizuho suffered eight tech system breakdowns this year. During one in September it failed to comply with anti-money laundering procedures necessary under the foreign exchange act in overseas remittances, despite Japan’s growing efforts against money-laundering.

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The finance ministry ordered Mizuho to submit a report by Dec. 17 on measures to prevent a recurrence and improve its audit system, and put them into effect quickly.

The ministry cited a lack of knowledge by Mizuho’s executives of foreign exchange law, a lack of communications among sections concerned and fragility of system management as reasons for the punishment.

The Japanese banking regulator, the Financial Services Agency, also issued a reprimand to the country’s third-largest lender over the series of system glitches.

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The FSA asked the group to clarify management responsibility for the system failures and provide updates on prevention measures every three months.

The finance ministry decided to take the corrective action against Mizuho because as one of Japan’s three megabanks it is responsible for payment systems, although no evidence of illegal money remittances has been found.

The ministry in August announced a three-year action plan that included tighter supervision of financial institutions in response to a report by the Financial Action Task Force (FATF), a global financial crimes watchdog.

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(Reporting by Tetsushi Kajimoto, Makiko Yamazaki and Yuki NittaEditing by Chang-Ran Kim and Kim Coghill)

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