MUFG, the world’s largest non-Chinese bank by some measures, announced on Thursday it would end all over-the-counter cash remittance services on June-1 as part of its crackdown on money laundering.
Unlike online transfer services provided by the likes of TransferWise, WorldFirst and OFX, among others, physical remittances involve little in the way of compliance or customer identity checks. In many countries, physical transfers can usually be completed in branches with nothing more than cash and a set of overseas account details, and sometimes a (potentially fake) driving license or passport, which opens up the possibility of untraceable funds being used for illegal practices.
MUFG is the first of Japan’s major commercial lenders to make the decision to discontinue cash remittances, though others are expected to follow suit as Japan’s remittance industry begins a process of being overhauled. As part of this process, a longstanding ¥1 million (US$9,000) cap on cross-border payments handled by non-banking entities will be scrapped, paving the way for smaller money transfer specialists to gain a level of market traction that has so far eluded them.
Japanese banks have been under pressure from the country's banking regulator, the Financial Services Agency, to step up anti-money laundering measures ahead of inspections this year by the Financial Action Task Force—an international watchdog aimed at tackling money laundering that has been highly critical of Japan’s "inadequate" safeguards.
For MUFG customers, from June onwards, funds sent overseas will need to come directly from an MUFG bank account. Whether those customers should be using MUFG at all (for payments less than ¥1 million) given the unparalleled savings that fintech payment processors offer on overseas transactions is another matter entirely.
Articles that mention Fintech:
Best Multi-Currency Accounts
We compare the features, exchange rates and security of the three best multi-currency accounts available today — the Wise Account, the WorldFirst World Account, and the OFX Global Currency Account.
WorldRemit - User Reviews
With WorldRemit, send money online 24/7 to 140 destinations at highly competitive exchange rates. Send to bank accounts and mobile money wallets, top up a loved one's mobile phone or send for cash pick-up.
Further reading on Fintech - Guides, Reviews & News from our research team.
Disclaimer: aPlease note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.