Regulator launches probe into Japanese regional banks internal audit

The move comes after a bank was alleged to have charged customers illicit commissions.

Reuters reports that Japan’s financial watchdog has launched onsite inspections to monitor the internal auditing activities of the country’s struggling regional banks.

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The move comes after a regional bank was alleged to have been charging customers illicit commissions on top of loan interest due to lack of sufficient internal auditing frameworks, prompting the Financial Services Authority to issue a business improvement order against the offending bank.

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The regulators are urging regional banks, who face a profit crunch brought about by the ultra-low interest rate environment, to beef up their their internal auditing function so that it can put a proper check on management, the source told Reuters.

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