Financial Crime World

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Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) in Japan

Japan has developed a comprehensive legal framework for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), based on recommendations from the Financial Action Task Force (FATF).

  • The main laws governing AML/CFT are:
    • Act on Prevention of Transfer of Criminal Proceeds
    • Foreign Exchange and Foreign Trade Act
    • Banking Act

Obliged Entities

Obliged entities, including:

  • Financial institutions
  • Money transfer service providers
  • Cryptoasset exchange service providers
  • Casinos

are required to implement AML/CFT measures.

Risk-Based Approach

Obliged entities must prepare a risk assessment report to identify and assess risks related to money laundering and terrorist financing. Based on this report, they must develop and implement effective AML/CFT measures.

Customer Due Diligence (CDD)

Obliged entities are required to perform CDD on their customers, which includes:

  • Verifying the customer’s identity
  • Obtaining information about the purpose and nature of their business relationship

Monitoring Transactions

Obliged entities must monitor transactions for suspicious activity, report suspicious transactions to the relevant authorities, and maintain records of all transactions.

International Cooperation

Japan has been a member of the FATF since its establishment in 1990 and cooperates with other countries to combat money laundering and terrorist financing.

Regulatory Oversight

The Financial Services Agency (FSA) is responsible for supervising obliged entities and ensuring that they comply with AML/CFT regulations.

Conclusion

Japan has implemented a robust legal framework and regulatory regime to prevent money laundering and the financing of terrorism. Obliged entities must implement effective AML/CFT measures to ensure compliance with these regulations.