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.
BER articles that mention Fintech:
WorldFirst World Card
WorldFirst World Card is a virtual Mastercard designed for global businesses, allowing online payments in multiple currencies with no FX fees.
Wise Review: Is It the Best Way to Transfer Money Internationally?
The Wise Account allows users to hold and convert funds in 40 different currencies and send and spend internationally, all at the “real” exchange rate and with exceptionally low service fees. Users can also receive major-currency payments free of charge.
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.