The Financial Services Agency took disciplinary action Friday against the Japanese branches of the Seoul-based Korea Exchange Bank for its involvement in illegal remittances.
The FSA ordered the two branches, in Tokyo and Osaka, to suspend operations involving overseas money transfers with new corporate customers between March 10 and June 9, agency officials said.
The agency also ordered the branches of South Korea's fifth-largest lender to enhance compliance to prevent any involvement with illicit money transactions and submit a business improvement plan by April 3.
According to the financial watchdog, the bank's Japanese branches processed remittances worth more than 10 billion yen on behalf of an underground bank between May 2001 and March 2005.
People involved in the unlicensed financial entity were arrested by Japanese police last year, while the mastermind of the scheme was arrested by South Korean law enforcement authorities, the officials said.
Due to lax procedures to confirm a money sender's identity, the bank's Japanese branches failed to comply with the legal requirement to report frequent remittances as well as those involving large sums, which might constitute criminal acts, they said.
The bank admitted to negligence but denied any intentional violation of law, the officials said.
