Some banks have started freezing withdrawals from accounts held by foreign nationals whose visas or residential statuses have expired as part of a government initiative to combat scams and fraud, the Financial Services Agency (FSA) said Wednesday.

The move comes after the National Police Agency requested in December that financial institutions implement measures to prevent those bank accounts from being used for receiving funds from scam victims or money laundering. ​

Although financial institutions require foreign nationals living in Japan to notify them of residency changes or extensions, it may not be widely known among foreign communities.

As a result, legitimate foreign residents who fail to report their extended residential statuses may find that they are unable to withdraw cash from their bank accounts. However, once the bank confirms a valid residential status, the restriction is lifted.

Some foreign nationals sell their bank accounts to criminal groups for quick cash when they return to their home countries. This is illegal.

If banks find out, the account owners will be blacklisted; they will not be able to open bank accounts in Japan in the future.

The FSA said that some banks have started implementing the withdrawal freeze following police recommendation, while other institutions are still preparing to do so.

The agency did not specify which financial institutions have started implementing the move, but MUFG Bank and Mizuho Bank — two of the country’s three megabanks — are among them.

MUFG Bank, which began implementing the measure in March, said that restrictions kick in from the next business day following the end of an account holder's residency period.

Mizuho Bank, on the other hand, said that it has been suspending withdrawals for such bank accounts since 2019 in response to the FSA’s anti-money laundering guidelines, which called for enhanced customer management.

Both banks have said that the withdrawal freeze is lifted once they can confirm the renewal of the account holders’ residency.

Authorities are working to raise awareness about the illegality of selling bank accounts as they are increasingly being used to facilitate crime.

The NPA has put up posters in multiple languages in addition to Japanese and English, such as Chinese, Korean, Vietnamese and Portuguese, to warn the public of the danger, and has highlighted the growing issue of bank accounts being used for illegal activities.

In 2021, the NPA reported the seizure of a substantial number of bankbooks and cash cards when making arrests.

In one case, police confiscated dozens of bankbooks and cash cards — many of which belonged to foreign nationals — at the home of a suspect arrested over an alleged medical expense reimbursement scam.