Sealed and delivered

FINANCE & ECONOMICS
Japan's second-hand bank accounts

Jan 6th 2005 TOKYO
From The Economist print edition

Identity theft, Japanese style

FIND a list of names in a rubbish dump; get a mobile phone; buy a second-hand bank account. That, plus a little acting talent, has netted swindlers billions of yen in Japan's latest crime trend. Crooks phone unsuspecting victims in tears, pretending to be grandchildren or other relatives. They claim to be in trouble—a car accident, say—and beg for several million yen to be sent to a certain bank account at once.

Remarkably, many people have fallen for this. Police say that thieves took more than ¥15 billion ($138m) between January and October last year, almost four times as much as in the whole of 2003. The true figure may be more: some people are doubtless too embarrassed to admit to being duped. Lately, the impostors have had to become cleverer, pretending to be lawyers or police rather than simply sobbing “It's me” (a phrase that has led the crimes to be dubbed ore-ore sagi, or “me-me frauds”).

One reason for the crime wave is the ease with which bank accounts can be bought and sold. Until recently, selling accounts, though illegal, carried no penalty. Because seals, rather than signatures, are used for bank transactions, accounts can be passed on by handing over bank-books and seals. Banks rarely demand personal identification even for large domestic transactions.

Those selling see an easy way to earn money without thinking about what their accounts might be used for, says Kiyoto Akiyama, a Tokyo lawyer who has helped victims reclaim some of their losses. Some have opened and sold 20 accounts at separate banks in a day.

Prodded by the authorities, banks are monitoring websites over which accounts are sold and are freezing or closing suspicious accounts. Yet they have been unable to keep up. Second-hand accounts might also be used for money-laundering and other crimes—although the Ministry of Finance says that they are unlikely to be used by terrorists, because banks have blacklists of overseas accounts and require personal identification for international transactions.

The racket may soon be stopped. Japan's parliament has voted to impose fines of up to ¥500,000 on buyers and sellers of second-hand bank accounts, with stiffer penalties, including jail, for those that operate secondary markets. The new regime came into force on December 30th. Even so, anyone receiving a begging call in this new era of video-enabled mobile phones should ask for pictures before parting with cash.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.