(Provisional Translation)

November 18, 2005
Financial Services Agency
The Government of Japan

Administrative Actions on Bangkok Bank, Japan Branches

I. Description of the Administrative Actions

Business Improvement Order based on Article 9 of the Law concerning the Identity Verification of Customers, Etc. by Financial Institutions, Etc. and Prevention of Improper Use of Bank Accounts, Etc., and Article 47 (2) and (3) and Article 26 (1) of the Banking Law.

(1)	An internal control organization (which encompasses both human resource factors and the construction of a system) to ensure compliance with laws and regulations must be established with attention paid to the following points:
	(i) A fundamental re-examination of organizations and operations relating to identity verification of customers and the customer control system in order to rectify violations of the duty to verify the identity of customers pursuant to Article 3 of the Law concerning the Identity Verification of Customers, Etc. by Financial Institutions, Etc. and Prevention of Improper Use of Bank Accounts, Etc. and the duty to create records of identity verification pursuant to Article 4 thereof. (ii) A basic organizational and operational review with respect to appropriate execution of the duty to report suspicious transactions pursuant to Article 54 of the Law for the Punishment of Organized Crimes, Control of Criminal Proceeds and Other Matters. (iii) Construction of a system to manage the organization to continuously, correctly and properly supervise and control the business operations of branches, and a system of internal controls, combined with the establishment of a clear system of responsibility. (iv) Thorough understanding of and compliance with laws and regulations by executives and employees, and building and strengthening of awareness regarding compliance with laws and regulations. (v) A basic review of the system, method, etc. of audits that are conducted of branch operations to ensure proper business operations and adequate controls to be in compliance with laws and regulations, and implementation and strengthening of follow-up work on audits.
(2)	The location of responsibilities among executives and employees, which became the cause of the problems relating to the matters discussed in the ensuing II. Reasons for the Administrative Action, including violations of laws and regulations, and those mentioned in the notice of inspection results and the order for reporting, must be clearly established.
(3)	A business improvement plan for operations relating to the matters that are discussed in (1) and (2) above, and mentioned in the notice of inspection results and the order for reporting must be submitted by December 19, 2005 and promptly implemented. (The plan must include the construction of a control system within the bank to steadily implement the improvement plan, as well as the clarification of the division of responsibilities to ensure its effectiveness.)
(4)	Following the implementation of the steps described in (3) above and until the implementation of the improvement plan pertaining to said operations is complete, a report summarizing the progress and implementation of the plan, etc. and the status of improvement must be prepared once every three months, and submitted by the 15th day of the following month. The first such report must be prepared at the end of March 2006.

II. Reasons for the Administrative Actions

(1)	During the latest on-site inspection by the FSA (Notice dated September 2, 2005), the Tokyo branch and the Osaka branch of Bangkok Bank (hereinafter referred to as ''the Branches'') were found to have repeatedly violated the duty of personal identity verification under Article 3 of the Law concerning the Identity Verification of Customers, Etc. by Financial Institutions, Etc. and Prevention of Improper Use of Bank Accounts, Etc., and the duty to create records of identity verification under Article 4 thereof on a number of occasions by arranging foreign currency remittances and opening bank accounts without verification of information that is legally required. These failures are attributed to the lack of internal regulations and office procedures properly established according to laws and regulations within the bank regarding the execution of the duty of identity verification, and the lack of a system to ensure that identity is verified by a department or a person in charge and that internal audits are implemented.
(2)	Regarding the execution of the duty to report suspicious transactions under Article 54 of the Law for Punishment of Organized Crimes, Control of Criminal Proceeds and Other Matters, remarkable inadequacy was found with respect to the construction of a system for guidance and training of executives and employees, and control of administrative work. While the duty of identity verification was also executed improperly as described in (1) above, no verification or monitoring was performed with attention focused on customers, circumstances surrounding transactions, purposes of transactions or remittances or sources of funds. A number of instances were found in which the Branches themselves identified suspicious transactions as the result of verifications performed in the latest on-site inspection by the FSA.
(3)	In addition to the matters described in (1) and (2) above, the Branches lacked both proper organization, which is indispensable for providing actual supervision and control of branch operations in Tokyo and Osaka, and adequate systems of compliance, control of customer information, administrative controls and loan credit risk management. Incidents of sales-related problems and troubles relating to said business operations resulting from such inadequacies were found.
(4)	Moreover, risk assessment that is stipulated by the internal control regulations of the head office of your bank is not performed by the Branches. As a result, serious problems were found with respect to the implementation of internal audits, including the absence of audits on foreign currency remittance operations, which are high-risk operations among all business operations of the branches. It was concluded that the Branches' own efforts cannot be counted on to achieve reliable improvements in light of the fact that there is a history of inadequate year-to-year follow-up on past on-site inspections by competent authorities other than the FSA and internal audits that were conducted.