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Mitsubishi UFJ fined $250 mil in U.S. for illegal transfers to Iran, Sudan

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BTMU is Japan’s largest bank when ranked by assets, according to SNL Financial.

I thought Japan Post was the largest?

0 ( +0 / -0 )

Mitsubishi UFJ following the footsteps of Daiwa (now Risona) bank that was finally expelled from NY.

5 ( +5 / -0 )

I thought Japan Post was the largest?

I guess you thought wrong.

0 ( +3 / -2 )

Man, I am interrogated here for a small transfer to the states. I guess they think they are special. Quarter of a billion dollar fine special. Shame on you Mitsubishi UFJ and shame on those in the states that allowed it to happen.

10 ( +12 / -2 )

Its sad that IRAN has sanctions only for being ebemy of Israel. The law of the strongest and weaker.

-10 ( +8 / -19 )

It's the US sanctions that are wrong, not processing banking transactions for Iran. Fact is Iran does not have Nuclear arms (As confirmed by the IAEA several times over the years), just as Iraq turned out not to have any weapons of mass distruction - but that didn't stop Bush from lying to congress and taking the US & it's allies to war on false pretences. Don'r believe the propoganda against Iran.

-15 ( +6 / -22 )

"...28,000 U.S. dollar transactions totaling about $100 billion through its New York operation between 2002 and 2007."

Doesn't matter what your opinion is of the rules in New York. BTMU blatantly broke the law in the country they were operating in. There is no excuse for doing so.

10 ( +11 / -0 )

BTMU employees routinely removed information from wire transfer messages that could have identified the government and business entities involved as targets of sanctions, the department said.

That sounds like obstruction of justice to me. I wonder if anyone went to jail for doing this. As far as I am concerned monetary penalties have become a cost of doing business and are easily reflected to customers and shareholders. I do not believe they are deterrents.

11 ( +11 / -0 )

Man, I am interrogated here for a small transfer to the states.

Glad its not just me. Even after decades of a "relationship" with the same bank they sure get paranoid anytime I move money anywhere.

Shame on Japan for breaking these rules. Economic sanctions are toothless enough as it is; if we don't have our closest allies on board what can we hope to achieve?

7 ( +8 / -1 )

Fact is Iran does not have Nuclear arms (As confirmed by the IAEA several times over the years),

No one has claimed that they have nuclear arms, what people are claiming is that they are developing nuclear arms. IAEA has stated several times they can't determine if Iran's nuclear program is for civilian power generation only or if they are indeed developing weapons, they have also stated that Iran has nuclear technology that is of really no use for civilian power but would be needed for the development of a nuclear weapon.

6 ( +8 / -1 )

@ Sillygirl and Hidingout - If you're looking for a convenient and hassle-free cash transfer option, CitiBank offers online transactions. The commission isn't exactly cheap - 3,500 yen, but the 'buy rate' is quite competitive (+ 1.25%). CitiBank has its shortcomings as well, but for transferring money, it's pretty good.

0 ( +1 / -1 )

" It's the US sanctions that are wrong,"

This is the truth.

Penalizing the bank is nothing less than extortion.

-12 ( +0 / -12 )

"Penalizing the bank is nothing less than extortion."

@Jean: Maybe you missed the part that read "BTMU employees [New York] routinely removed information from wire transfer messages that could have identified the government and business entities involved as targets of sanctions, the department said."

12 ( +12 / -0 )

BTMU employees routinely removed information from wire transfer messages that could have identified the government and business entities involved as targets of sanctions, the department said.

"could have"? Does that mean the bank did not send any money to sanctioned entities, but could have sent some? $250 million fine for just "could have"?

I feel uneasiness for the trend of "presumed guiltiness" against foreigners in the US. Soon foreigners will be hanged or detained just for they could have committed some crime.

-8 ( +0 / -8 )

And by the way Citibank has been fined and sanctioned by Japan a few times over the past ten years for money laundering. So was that also wrong?

6 ( +6 / -0 )

There is so much money laundering in Japan, banks requarly get fined and the government does nothing, Citibank has been fined so much they are no longer allowed to open new Japanese citibank accounts.

5 ( +5 / -0 )

Does that mean the bank did not send any money to sanctioned entities

It would rather means that employees of the bank were conscientiously removing information (deleted all evidences) that if left in the wire could have been helping this money laundering crime to be identified earlier.

6 ( +7 / -1 )

Citizen2012

that if left in the wire could have been helping this money laundering crime to be identified earlier.

Here we go again. "could have"

-6 ( +0 / -6 )

Israel has Nuclear Weapons

-4 ( +4 / -8 )

Imagine if this had happened within Japan's borders. "This is highly regrettable and we will make sure it doesn't happen again." <bow/crocodile tears/bow> Then business as usual!

4 ( +5 / -2 )

paulinusa

The main reason of sanction against the subsidiary of Citi Bank in Japan was its ripping of clients by selling highly speculative investment product taking very high fees.

http://www.fsa.go.jp/news/newse/e20040917-3.html

http://www.fsa.go.jp/en/news/2009/20090626-3.html

http://www.fsa.go.jp/en/news/2011/20111216-1.html

0 ( +2 / -2 )

That's funny, violate international sanctions, huge fines, shame. Banks rip off their own customers, uh yeah, we'll pretend we didn't see that.

5 ( +6 / -1 )

Try to send an international money order to pay for anything and you have to explain every last detail every time you go to JP, such as if the transaction has any ties to anything dealing with N.Korea, etc. and pay a ridiculous fee! Here you have a Japanese bank that routinely flaunted the same type of sanctions like they were above the law. Great to see my home state catch 'em and stick it to 'em, too! It won't be the last time this year a Japanese institution gets caught doing this kind of thing, I bet.

7 ( +7 / -0 )

Doesn't matter what your opinion is of the rules in New York. BTMU blatantly broke the law in the country they were operating in. There is no excuse for doing so.

Some rules/laws (like this stupid one) are meant to be broken.

Shame on Japan for breaking these rules.

It was not Japan.

Economic sanctions are toothless enough as it is; if we don't have our closest allies on board what can we hope to achieve?

The US would achieve so much more if they let Iran get on board and become a close ally. The US should instead sanction their "#1 closest ally"...

-19 ( +2 / -21 )

It seems regulators in New York is hiding something. Here is the link to the news release by the DFS of State of New York. http://www.dfs.ny.gov/about/press2013/pr1306201.htm

What you do not see in the news release is found in the consent order. http://www.dfs.ny.gov/about/press2013/pr201306201-tokyo.pdf

WHEREAS, from at least 2002 to 2007, BTMU engaged in a practice under which BTMU's employees in Tokyo routed US dollar payments through New York after first revoming information from wire messages that could be used to identify the involvement of sanctioned parties.

I am quite doubtful removing certain information in Tokyo is illegal by Japanese law or even New York law. On top of that, when did State of New York get jurisdiction over actions in Tokyo? It even does not have any jurisdiction over actions in New Jersey.

WHEREAS, after learning of these practices (described above) in 2007 and conducting an internal review of these practices, BTMU reported its findings to the US authorities, and has represented that it has ceased such practices and undertaken remediation efforts.

OK, it was 2007 and it is 2013 now. What has NY state regulators been doing for that 6 years, unless it thought the case is not illegal?

-5 ( +0 / -5 )

CH3CHO >>>>>>>>>>>They have been Thoroughly Investigating It. Hence a long time.. Not Like .. Japanese Ones ... .......That Sell Nuclear Technology ...to Every one it can sell to and Not think of the Consequences of it. Just for a Fast Billion or two Yen.

1 ( +1 / -0 )

Ron Barnes

They have been Thoroughly Investigating It.

You must be sarcastic. If it were of any importance, the regulators should have moved much much more quickly.

-1 ( +0 / -1 )

ch3cho - your seemingly obssessive moment with "could have", fails to grasp the context within which it intially appears.

There's could have, and then there's could have - which you could have mentioned if you could have.

Fact is they acted as they wanted to - beyond the law because they're the Biggies and Biggies reign.

1 ( +3 / -2 )

As punishment, make them buy Detroit.

0 ( +0 / -0 )

Yubaru

Japan Postal Savings isn't actually a 'bank'.

0 ( +0 / -0 )

CH3CHO,

You're trying far too hard here and demonstrating more of a lack of reading comprehension skills than any ability to uncover a sinister plot to unfairly accuse BTMU of wrongdoing.

The fact that BTMU employees conducted some 28,000 transactions that resulted in the transfer of US$100 billion is not in dispute. BTMU itself admits to the charges. The metadata identifiers that would have allowed U.S. or other regulators to ensure that US banks were not party to this systematic laundering of money (that's what it means when one removes any traces of the origins of a particular source of money) were removed, not by accident, but on purpose, specifically "in order to avoid freezing of funds" (this is a quote from the very same article you provided a link to above).

To answer your question, the fine isn't because BTMU could have been instrumental in sneaking US$100 billion to Iran. It's because it did funnel US$100 billion to Iran in a way that was purposely trying to avoid detection via the traditional methods employed by U.S. regulator on the lookout for banking irregularities.

In response to the following:

I am quite doubtful removing certain information in Tokyo is illegal by Japanese law or even New York law. On top of that, when did State of New York get jurisdiction over actions in Tokyo? It even does not have any jurisdiction over actions in New Jersey.

You'll have to forgive most her for not placing a huge amount of weight on your "doubts." U.S. banking regulators -- more specifically New York banking regulators -- have every right to ensure that the banks under their jurisdiction are not used for illegal activities, even if those activities began all the way on the other side of the planet in Tokyo. If BTMU sought to route the disguised monies through any bank other than is own, it automatically became subject to the laws and regulations of the nation through which it sought to move funds. Never mind the implications of Japan being a supposed ally of the United States in virtually every facet of this complicated political and economic morass we all live in. I would highly recommend you take a crash-course on the fundamentals of international banking.

"Soon foreigners will be hanged or detained just for they could have committed some crime."

Now you're just being plain silly.

4 ( +4 / -0 )

JeanValJean: Penalizing the bank is nothing less than extortion.

The sanctions may be wrong. I can't say. Surely, though, BTMU agreed to abide by the laws and agreements of the countries in which they are doing business. I doubt this is an act of conscious civil disobedience on the part of BTMU.

CH3CHO: Soon foreigners will be hanged or detained just for they could have committed some crime

Only if it's in New Hampshire or Washington state, otherwise it'll be electrocution, firing squad or lethal injection and even then, none of the crimes mentioned in the article call for capital punishment. A little paranoia as regards to one's government is a good thing. Too much paranoia is just paranoid.

Mocheake: Try to send an international money order to pay for anything and you have to explain every last detail every time you go to JP

Too right! I used to use JP money orders to pay my credit card bill and got the 5th degree every time. It was never enough to show them the bill and say I was paying it. They wanted to know what I'd purchased and where. When one postal clerk demanded to know what books I'd purchased from Amazon, I ripped the form up, walked out and have never again used that as a method for paying any bill. It may have been the law but I didn't like it so I found another, less intrusive, perfectly legal way to pay the same bill.

If this were a non-Japanese person or entity breaking a law, sanction, agreement, etc. in Japan those complaining now would be up in arms about how "this is Japan" and we have to "obey the laws and do things the Japanese way" and "not be arrogant foreigners", all of which are correct statements and in all of which you could swap out the word Japan with any other country, in this case it's the U.S. I know it's fashionable and in many cases quite reasonable to hate the big, ol' U.S. of A. but when doing so try not to be so ridiculously hypocritical and full of double standards.

0 ( +0 / -0 )

Badsey,

Your decimal is out of place. .25% does not mean 25 percent. It means point-25 percent, which works out to something like $2.5 million, and not $250 million.

In that light, a $250 million penalty represents 25 percent (one-fourth) of the total amount of money moved. This is a significant slap on the wrist considering any profits BTMU made from the transfers amounted to only a percentage of the total amount of money moved in the form of commissions.

In other words, BTMU didn’t actually make $1 billion off the illegal transfers. It just moved $1 billion and collected fees from the clients for doing this service. I couldn’t find the money transfer fee schedule for the Bank of Tokyo Mitsubishi-UFJ, but a rival bank like Citibank charges a flat $40.00 fee for money transfers for corporate accounts, regardless of amount. That charge is even lower if one is an actual BTMU customer with a minimum monthly balance of $10,000, working out to $25.00 per transaction.

BTMU made some 28,000 transactions. At the higher fee rate of $40.00 per transaction, that works out to some $1.12 million in collected fees for BTMU. This $250 million fine represents a punishment some 223 times any profits BTMU made on the transaction. Not too shabby a punishment, I should think.

-1 ( +0 / -1 )

When you deal with laundering money (same goes with the drug money) at that level, I don't think the bank is going to apply some regular transfer fees LOL.. this is criminal act we are talking here because it does require the employees also to delete information from those wires and keep mouth closed. I think the bank did a deal directly with the beneficiaries behind closed doors.

-1 ( +1 / -2 )

Citizen2012

When you deal with laundering money (same goes with the drug money) at that level, I don't think the bank is going to apply some regular transfer fees LOL.. this is criminal act we are talking here because it does require the employees also to delete information from those wires and keep mouth closed.

What we know based on court documents is that normal employees carried out these transactions in the course of regular daily business from 2002 to 2007 per special instructions from management to remove metadata that could lead regulators to discover the transfers were destined for Iranian banks.

No backroom dealings. No cloak & dagger intrigue. Simply not filling in the proper information required by law with the hopes that it would go unnoticed. And they did this twenty-eight thousand times. LOL, indeed.

Now, are you suggesting rank-and-file bank employees met in backrooms with co-conspirators 28,000 times between 2002 and 2007 simply to markup the cost of transfers, despite the logical assumption that to do so would raise even more red flags for regulators?

Or let's look at it from another perspective. $1 billion made it to its destination banks in Iran before regulators figured out the scam. The penalty of $250 million dollars represents one fourth of that total amount. It seems unlikely that co-conspirators on the Iranian side would be so desperate as to essentially throw away 25 cents out of every dollar transferred. That's not a very wise investment , no matter how dire the financial straits Iran is as a result of U.S. sanctions. I'm not saying it's impossible, but just highly unlikely that they would take that much of a soaking.

Which brings up the last obvious point that if rank and file employees were involved in this process, it stands to reason that making sure all other aspects of the transactions -- all 28,000 of them -- remained as innocuous as possible. So if BTMU officials were raking in more money than the $250 million fine that was levied against them, then they were practically begging to be caught, sincethere can be no reasonable expectation that that kind of unconventional cash flow would be concealed for long with that many regular employees -- translation: witnesses -- in on the deal, however unwilttingly.

Now maybe the person or persons who spearheaded this little scheme got a little something extra from their Iranian counterparts for their cooperation. But even that could not realistically have been anywhere even remotely close to the $250 million fine levied.

-1 ( +0 / -1 )

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