Financial Crime Investigation Procedures in Japan: Understanding Money Laundering and Prevention Measures
Introduction
In 2022, Japanese financial institutions reported a record high of 583,317 transactions suspected as money laundering, a significant increase from the previous year. This surge has led to growing concerns about the involvement of innocent parties in money laundering schemes and the potential consequences of such activities.
What is Money Laundering?
According to Japan’s National Police Agency, money laundering involves disguising criminal proceeds to obscure their source and true ownership, often to evade detection by investigative authorities. The funds may be used to finance the activities of organized crime groups or fuel their ongoing operations and growth.
Money laundering is a prohibited act in Japan, enforced under laws such as the Act on Punishment of Organised Crimes and the Anti-Drug Special Provisions Law. Prevention measures are implemented through laws like the Act on Prevention of Transfer of Criminal Proceeds.
The Money-Laundering Process
The money-laundering process typically involves three stages:
Placement
Introduced criminal proceeds into the financial system, often through cash deposits or other forms of payment.
Layering
Moved funds through repeated transactions to obscure their origins. This may involve transferring funds between different accounts, using shell companies, or engaging in complex financial schemes.
Integration
Reintroduced the laundered funds into economic activity in seemingly legitimate ways, such as investing in businesses or purchasing assets.
Examples of Money Laundering in Japan
Several major cases of money laundering were reported in Japan in 2022 and 2020. These include:
- Impersonating someone else to sell rights to use electronic money obtained through sophisticated fraud schemes
- Concealing assets using a crypto address belonging to an unidentified person
- Cross-border concealment of funds
In each of these cases, the perpetrators were charged with “concealment of criminal proceeds,” which accounts for more than half of all money-laundering offenses.
Measures to Prevent Money Laundering
Financial institutions in Japan are strengthening measures to prevent money laundering. These include:
- Verifying transaction details and customer identity through documents such as the Confirmation of Purpose of Transaction, Confirmation of Customer Information, and Confirmation of Delivery Details.
- Refusing to fulfill obligations related to a transaction or halting it altogether if a customer ignores these requests.
- The government urges individuals to respond within the given deadline when receiving such documents from financial institutions.
Conclusion
Money laundering is a serious crime that involves disguising criminal proceeds to obscure their source and true ownership. Japan has implemented laws and guidelines to prevent and punish money laundering, including strengthening measures by financial institutions to verify transaction details and customer identity. Individuals should be aware of these procedures and respond accordingly to avoid any potential consequences.