On Friday, Japan’s Kanto Local Finance Bureau issued a business improvement order against Revolut Technologies Japan, Inc., which is the local subsidiary of the London-headquartered fintech.
The order came after the Financial Services Agency (FSA) conducted an on-site inspection of the company, finding “serious problems” in the firm’s “control environments for governance, management of outsourced contractors, and money laundering and terrorist financing risk management.”
The regulator elaborated that the Japanese subsidiary of Revolut failed to fully establish proper governance for providing funds transfer services in a proper and steady manner. Further, the Japanese arm did not check the primary services, like funds transfer services in a proper and steady manner, it outsourced to its London-based parent.
Additionally, Revolut Japan did not develop proper checks on money laundering and terrorist financing risk management . In addition, it lacked a system for strict transaction verification and had no rules for determining suspicious transactions.
Improvement Orders
To rectify the issues, the Japanese regulator provided a series of business improvement orders to Revolut Japan.
The company needs to establish a controlled environment to ensure proper governance, legal compliance, management of outsourced contractors and money laundering and terrorist financing risk management.
Also, the Japanese firm needs to submit a business improvement plan to the regulator by October 3, mentioning the specific measures it is going to take based on the order and implement them immediately after the submission.
Moreover, the company has been ordered to report its progress and implementation status quarterly to the regulator until the completion of all the necessary implementations.
Meanwhile, Revolut has been aggressively expanding its global footprint. Most recently, it gained approval from the regulator in Cyprus for offering cryptocurrency services.
