Cleaning Money At Soaplands

Police in Tokyo arrested a manager at Kanaden, an electronics parts company. He was charged with bribing Hideyuki Tominaga, head of the development division of Japan Freight Railway. The bribes were supposed to encourage development work to be given to Kanaden.

What is interesting, and scintillating, is the way the bribes were executed. Tominaga would over pay for massages at a soapland, the change going to Kanaden. This is a lot like money laundering techniques export-importers use.
a soapland scene by Riana Natsukawa

For those of you who do not know what a soapland is… Well, it isn’t exactly safe for work to show you. The image I provided give you an idea if you don’t want to do a search. The quick description would be that a man would go in to an establishment called a soapland. He is assigned to a beautiful female attendant who washes him, baths him and massages him in private. You can see all of the potential, can’t you? One thing to note, in Japan, only intercourse for pay is considered prostitution. All other types of sexual activity can be compensated without going afoul of the laws.

In this particular case, the only part that was afoul of the laws was the bribery. Another interesting thing is that paying money for more business is generally not a bribe in Japan. Japan Freight Railway, however, is a pseudo-private company. Meaning, it is state sponsored, although it is in most other ways just like any other company. But these pseudo-private companies must follow all government business practice standards.

So, what is amazing about this case from a compliance standpoint is that neither the use of sexually charged, if not actual sex, service nor paying to direct business their way are illegal acts in themselves. Tominaga really had to work hard to run afoul of the law.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book History of Money Laundering: How criminals got paid and got away.