Japan’s Financial Agency punishes Citigroup with prohibiting order

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Monday April 25, 12:01

Japan’s Financial Agency punishes Citigroup with prohibiting order

(by Helen Snow)

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Japan’s Financial Agency punishes Citigroup with prohibiting order

Japanese government ordered Citigroup Inc.’s Japan trust-banking unit to stop arrangement of new business in the region. The move is declared to be a kind of punishment for violating local banking laws.

However, the order is rather rhythoric in light of the fact that Citigroup in 2004 announced it would close the unit, admitting that the unit had compliance and governance problems with Japanese law.

Still, the move by Japan’s Financial Services Agency does not bring any good for Citigroup’s already blotted reputation. Last year, the agency ordered the New York-based bank to shut down its private-banking units accused of lax controls against money laundering and other violations.

Meanwhile, Cititrust is prohibited from new operations starting May 2. But there are certain conditions under which the order could be lifted. According to them, Cititrust is required to dismiss officers responsible for the violations and to submit a plan for tightening controls by May 27.

In its turn, Cititrust issued a statement Friday saying that it accepts the claims and will act in compliance with the FSA’s conditions.

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