After a recent inspection of Citibank Japan’s operations, the Financial Services Agency of Japan (FSA) has sanctioned the company.
In a report issued in May 2004, FSA found that there were fundamental problems in Citibank Japan’s internal controls and governance structure, principally in its private banking operations. The Securities and Exchange Surveillance Commission of Japan (SESC) also recently inspected Citibank Japan’s private banking operations and identified in a report issued in September 2004 that there were certain violations of laws and regulations by Citibank Japan and certain of its employees.
Citibank Japan has apologized for the problems identified in the FSA orders and is says it is addressing the issues raised and working to prevent their recurrence.
The sanctions imposed by the FSA will require the private bank division of Citibank Japan to suspend all new transactions with its customers beginning on September 29, 2004 and discontinue all banking operations by September 30, 2005. It conducts its operations exclusively from Citibank Japan’s Marunouchi branch and its satellite offices in Nagoya, Osaka and Fukuoka, all of which will be required to discontinue operations in accordance with the timetable imposed by the FSA.
The FSA orders also require Citibank Japan to improve its governance, compliance and internal control systems and to suspend acceptance of new foreign currency deposits from new retail customers from September 29, 2004 through October 28, 2004.