A.  Japanese financial institutions' system to prevent terrorist funding and money laundering is at a reasonable level in the first place, even by international standards. Efforts to prevent terrorist funding and money laundering is not only becoming an important issue for Japan itself but also becoming increasingly important in terms of ensuring confidence in the financial market internationally. With this in mind, we decided to revise the supervision guidelines, based on the judgment that it would be appropriate to require financial institutions to undertake even tougher measures to prevent terrorist funding and money laundering by clarifying the focal points of supervision.

A.  Assuming that the reported facts are accurate, the conditions that have led the company to sustain a negative legacy for such a long period of time needs to be called into question. However, President Shoji Kuwashima deserves to be commended on his decision to switch to a new structure with a view to settling the negative legacy by changing the corporate constitution resolutely in response to such acts, and putting an end to remunerating the ex-managing director so as to comply with laws and regulations. It is hoped that Nikko Cordial Corporation will enhance governance by thoroughly carrying through such efforts, and ensure soundness in its financial position and its operations.

A.  I commend the company for having been capable of taking the first step to break away from its past, in the sense that it has established a special investigation committee inside the company, finished its report on the results of investigation in a speedy fashion and disclosed the results thereof without concealing anything.

A.  Generally speaking, in regards to determining our future approach to further improving audit functions in that context, I have extremely high expectations for the fruits to be borne from the upcoming amendment of the Certified Public Accountant Law. As this will naturally be incorporated into deliberations at the current Diet session and questions will be asked, we hope to work out a firm solution in the process of answering their questions in a serious manner.

A.  I believe that the G7 nations do not vary in their recognition that the global activity of funds is becoming massive and their influence over economies and international financial systems is steadily growing. However, the rating of fund-of-funds is currently being considered under Basel II in ensuring the soundness of banks, and the transparency and rating of funds are not necessarily unrelated in view of the aforementioned systemic risks, so in that sense, the approach to hedge funds needs to be discussed from here onwards as a matter of course.

A.  Firstly, one way of looking at it is to evaluate hedge funds from the point of view of their contribution to the efficiency of financial markets. Additionally, there is a need to be wary of potential risks. In Japan, we are considering requiring financial institutions that provide loans and other services to hedge funds to perform appropriate risk management in the course of inspections and supervision, while dealing with them under the Financial Instruments and Exchange Law. It is important to collaborate with overseas authorities and international agencies to identify the actual state of funds, so we will respond appropriately in Japan while keeping a close eye on international discussions.

A.  The governor, deputy governor and chief treasurer visited me and made some polite requests. Their requests will serve as reference when assessing the business plan, which is to be submitted in the weeks ahead. We will endeavor towards the selection of an adequate acquirer so that Ashikaga Bank can establish confidence among customers in the region centering on Tochigi Prefecture, and demonstrate its financial intermediation functions in a sustainable manner even after it is transferred to the acquirer.

A.  It is extremely regrettable that the bank had been doing favor for non-law-abiding element such as these for a long period of time. The fact is that this practice had been passed down over many years at the business base whereat the bank handles corporate affairs. Moreover, the management team and the headquarters had failed to deal with the situation appropriately. Considering that it did not examine effective remedies such as concrete countermeasures to revise the dealings, we issued an order as required. The impression it gives to shareholders, creditors, clients, depositors and the general public is an extremely regrettable one, that it is strong against the weak but weak against the strong, and in particular, that such an institution has no countermeasures against problems of violence in society, so we strongly urged the Bank to take measures to tackle this.

A.  It is not enough to just reprimand someone limited to the top management to counter antisocial elements. In making the bank strictly enforce training programs as stated in the business improvement order, what matters is improving its constitution and making everyone work together and tackle the situation in an organized manner across the board. In that sense, to counter organized crime groups, you cannot do anything by confining the matter to the top management alone. In that respect, I think that silent phone calls, harassment by stalking and other such activities cannot be resolved by small numbers of people in upper management alone or by other measures of that kind, unless training programs are based on the idea that all individuals must combine their efforts, form a scrum and tackle the matter together. I therefore hope the management team and all employees will engage in the training programs, and from such a perspective, each and every one of them feels repulsion toward antisocial elements and takes countermeasures against them in all stages of the business procedures starting at the bank counter.