U.S. financial authorities are contemplating imposing an administrative punishment on the U.S. units of Bank of Tokyo-Mitsubishi UFJ for its allegedly lax monitoring against money laundering, sources said Saturday.
The bank has been gearing up to establish a financial holding company in the United States to launch full securities operations, but the punishment could delay BTM UFJ's plan.
The move shows clearly that the U.S. has reinforced its measures to shut out funds that may be used for terrorism, and other Japanese banks may be required to step up their efforts to monitor money laundering.
The sources said U.S. authorities appear to have called into question procedures at BTM UFJ's New York branch office and its subsidiary company in the U.S.
A U.S. official in charge will soon visit the bank's head office in Tokyo to ask questions about its steps to counter money laundering, they said.
A U.S. affiliate of Mitsubishi Tokyo Financial Group Inc., the predecessor of Mitsubishi UFJ Financial Group Inc. to which BTM UFJ belongs, received an order to improve monitoring against money laundering in 2004.
The U.S. authorities did not officially announce the 2004 order, but they will make public the expected punishment this time to seek improvement of the monitoring system, as it will be the second time for BTM UFJ to face an administrative order, the sources said.
BTM UFJ has 12 operational bases in the U.S., including in San Francisco and New York.
Japanese banks have voluntarily regulated transactions with financial institutions that U.S. authorities see as problematic, even though the businesses do not violate any Japanese regulations.