Money laundering battle drives Japan banks to JPMorgan’s network
JPMorgan Chase & Co.’s blockchain-based information network for payments is drawing the greatest interest in Japan, a country long blamed for weak measures against money laundering.
More than 80 Japanese banks have expressed a willingness to join the Interbank Information Network, said Daizaburo Sanai, an executive director at the U.S. firm. That’s the most from any single country among the more than 360 lenders on the network worldwide.
Japanese banks may be seeking to use the platform to bolster anti-money laundering measures because it makes the screening of cash recipients “faster and more efficient,” Sanai said in an interview.
IIN is among several initiatives being developed using digital technology to speed up global money transfers. Companies including Facebook Inc. are working on blockchain-based payments projects and incumbent Swift has developed a new system to accelerate transaction processing.
JPMorgan, which launched IIN as a pilot in 2017, has begun implementing it outside of Japan and plans to go live in the country as soon as January, Sanai said. Under the platform, when a payment is flagged for confirmation, several parties can request and share information simultaneously, according to the U.S. bank’s website.
Banks in Japan have been under pressure to strengthen steps to prevent money laundering and terrorism financing since the Financial Action Task Force found deficiencies in the country in 2014. The Paris-based organization finished its latest on-site inspection of Japan in November and plans to announce the result next year, a finance ministry official said.
Minimizing delays caused by inquiries between banks could enable “quick collaboration with law-enforcement authorities, which is an effective way” to fight money laundering, said Takashi Endo, a treasury operations department officer at Sumitomo Mitsui Trust Bank Ltd. The Tokyo-based bank is among the lenders that have signed a letter of intent to join the platform.
Swift, the global banking cooperative, has developed a service called the Global Payments Initiative, which uses existing standards to enable cross-border payments for banks in a faster and easier-to-track way than its traditional messaging system. Facebook is working on a digital currency called Libra for cross-border payments, while JPMorgan has created JPM Coin.