American Banks

Citigroup Told to Stop Ads in Japan

By CHRIS NICHOLSON

Japanese regulators ordered Citigroup on Friday to suspend advertising and other promotional activities in its retail banking division in Japan for a month for compliance violations and for failing to monitor suspicious transactions.
The regulator, the Financial Services Authority, said Citigroup’s Japanese unit, Citibank Japan Ltd., had failed “to make notification of suspicious transactions, including money laundering.”
It cited fundamental problems with the bank’s compliance and governance system.
“C.J.L. has not accurately identified a series of problems that were recently found,” the agency added, “and the effectiveness of the internal audit has not been ensured.”
The suspension, which is to begin July 15, means that the bank will be prohibited from advertising, soliciting customers or using publicity in relation to its retail banking products.
Citigroup issued an apology and said that “this suspension does not restrict any activities with customers who wish to enter into a transaction with Citibank Japan. Nor does it affect in any way Citibank Japan’s ability to serve its corporate banking division clients.”
The financial regulator had issued a warning to Citibank Japan in 2004, suspending certain operations for a year. The business improvement plan that followed has not been adopted in a satisfactory manner, the agency concluded.
Citibank Japan has not updated a database used to screen suspicious transactions in five years, the regulators said, and managers “lack an understanding of the rules applied in Japan, such as laws and regulations, and an awareness of improvement.” (learn more at )