Financial Crime World

FATF Revised Recommendations Spark Japan’s AML/CFT Efforts

June 2003 marked a significant milestone in Japan’s anti-money laundering and combating the financing of terrorism (AML/CFT) efforts. The Financial Action Task Force (FATF) revised its “40 Recommendations,” expanding the scope of operators required to implement customer identification measures, among others.

Key Milestones in Japan’s AML/CFT Journey

  • 1992: Enactment of the Anti-Drug Special Provisions Law
    • Criminalized money laundering activities connected with drug crimes
    • Established a suspicious transaction reporting system
  • 2000: Act on Punishment of Organized Crimes and Control of Crime Proceeds
    • Extended scope of predicate offenses for money laundering and suspicious transaction reports to include serious crimes beyond illegal drug trafficking
  • 2002: Enactment of the Act on Punishment of Financing of Offences of Public Intimidation
    • Included terrorist financing as a predicate offense
    • Required financial institutions to report suspicious transactions related to assets suspected of terrorist financing
  • 2003: Law on Customer Identification by Financial Institutions etc.
    • Implemented customer identification regime required under the FATF Recommendations and the International Convention for the Suppression of the Financing of Terrorism
  • 2004: Enactment of the Act on Confirmation of Customers Identification by Financial Institution etc. and Prevention of Unauthorized Use of Deposit Account etc. (Customer Identification Act)
    • Addressed issues related to fictitious accounts and passbooks used in fraudulent activities

Further Developments

In 2007, Japan’s AML/CFT regime underwent further changes with the enforcement of the Act on Prevention of Transfer of Criminal Proceeds. This law aimed to implement the FATF’s revised recommendations, which included expanding the scope of business operators required to implement customer identification measures beyond financial institutions.

  • 2010: Meeting on customer due diligence for measures against money laundering
    • Highlighted need for improvement in this area
  • 2011: Amendments to the Act on Prevention of Transfer of Criminal Proceeds
    • Addressed ongoing issues related to illicit transfers of savings passbooks and other fraudulent activities
  • 2013: Amended law came into full effect
    • Marked another step forward in Japan’s efforts to combat money laundering and terrorist financing

Conclusion

Throughout its AML/CFT journey, Japan has demonstrated a commitment to implementing international standards and best practices. These developments demonstrate the country’s ongoing efforts to strengthen its financial sector and prevent illegal activities from undermining its economy and security.