Financial Crime World

Risk-Based Approach to Anti-Money Laundering in Japan: A Must-Know for Lawyers

In an effort to combat money laundering and terrorist financing, the Japanese government has implemented a risk-based approach to anti-money laundering (AML) regulations. This approach requires lawyers to take a proactive role in preventing money laundering and identifying potential risks.

National Risk Assessment

According to the Financial Action Task Force (FATF), Japan faces significant risks of money laundering and terrorist finance. The National Public Safety Commission publishes an annual report on these risks, which can be accessed through the Japan Financial Intelligence Center’s website.

The FATF has also published guidance on a risk-based approach to AML for legal professionals. This report is useful in understanding the money laundering risks associated with legal practices.

A working group within the Japanese Federation of Bar Associations (JFBA) has conducted a thorough review of these reports and identified specific money laundering risks that are particular to legal practices in Japan. The group’s findings, which can be accessed through the JFBA website, provide valuable insights for lawyers looking to comply with AML regulations.

Preventive Measures Adopted by Large Law Firms

The JFBA has also surveyed large law firms on their preventive measures against money laundering and reported the results. This report provides a useful benchmark for smaller law firms looking to implement AML measures.

Purposes of Instructions - Designation of International Terrorists

  • Lawyers must carefully examine the purposes of clients’ instructions before accepting them, taking into account attributes such as:
    • The client’s nationality
    • The client’s profession
  • The government publishes a list of designated international terrorists, which lawyers should consult when examining clients’ instructions

Conclusion

As Japan continues to implement its risk-based approach to AML regulations, it is crucial that lawyers understand the risks associated with their practices and take proactive steps to prevent money laundering and terrorist financing. By doing so, they can ensure compliance with regulatory requirements and maintain public trust in the legal profession.

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