On-Site Inspections

The Deposit Insurance Corporation of Japan (DICJ) conducts the following on-site inspections based on the Deposit Insurance Act and other laws and regulations.

1.“Inspections based on the Deposit Insurance Act,” which examine the payment of insurance premiums, etc.
2.“Inspections based on the Act on Damage Recovery Benefit Distributed from Fund in Bank Accounts Used for Crimes (Criminal Accounts Damage Recovery Act),” which examine the procedures for payment of damage recovery benefits, etc.
3.“Inspections based on the Act on Utilization of Funds Related to Dormant Deposits to Promote Public Interest Activities by the Private Sector (Dormant Deposits Utilization Act),” which examine the procedures for transfer and management of funds related to dormant deposits, etc.

The abovementioned Acts each stipulate that an administrative agency, such as the Financial Services Agency, may authorize the DICJ to conduct inspection of a financial institution when the agency finds it necessary. They also provide for penal provisions concerning avoidance of inspection and other inappropriate acts.

1. The scope of inspections based on the Deposit Insurance Act is defined in Article 137, paragraph (6) of the same Act.
Since August 2001, the DICJ has been implementing inspections of whether financial institutions have implemented measures to maintain the name-based aggregation databases and systems as required (the name-based aggregation databases, etc.) (inspections under item (ii)). In addition, the DICJ has conducted inspections on whether the payment of insurance premiums has been made properly (inspections under item (i)) since January 2003. As appropriate payment of insurance premiums is indispensable for the stable operation of the deposit insurance system, the DICJ is striving to ensure that premium payments are being made properly so as to maintain equality among financial institutions as payers of insurance premiums.
Also, Article 58-3, paragraph (1) of the Deposit Insurance Act was revised in May 2011 and enforced in May 2012 (including the Ordinance of the Cabinet Office on the measures provided in Article 58-3, paragraph (1) of the Deposit Insurance Act). In order to comply with this revision, in inspections under item (ii), the DICJ also has been conducting inspections on the status of “separate management of insured and uninsured deposits; development of systems for preparing data on changes in deposits, etc. (detailed statement files on deposits and withdrawals); and preparation for offsetting of deposits against loans and purchase of deposits and other claims (estimated proceeds payment) (preparation of procedures and manuals, etc.)”.
Regarding the inspection under item (iii), “Calculation of the estimated proceeds payment rate,” the DICJ is prepared to conduct inspections when necessary in order to ensure that financial institutions properly pay the estimated proceeds in the event of their failure.
2. The scope of inspections based on the Criminal Accounts Damage Recovery Act is defined in Article 36, paragraph (6) of the same Act. Under this provision, the DICJ may conduct inspections in order to check (1) the procedures for expiry of claims on deposits, etc. (Chapter 3) and (2) the procedure for payment of damage recovery benefits (Chapter 4).
3. The scope of inspections based on the Dormant Deposits Utilization Act is defined in Article 44, paragraph (6) of the same Act. Under this provision, the DICJ may conduct inspections in order to check (1) the procedures for transfer and management of funds related to dormant deposits, etc. and (2) the entrustment or re-entrustment of the payment, etc. operations.

The DICJ has been striving to improve the system to appropriately conduct inspections in line with the expansion of the scope of inspections.

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