Japan Receives Mixed Assessment on AML/CFT/CPF Measures from Financial Action Task Force

Tokyo, Japan - The Financial Action Task Force (FATF) has completed its mutual evaluation of Japan’s anti-money laundering and combating the financing of terrorism (AML/CFT) measures, revealing a mixed assessment on the country’s compliance with international standards.

Overview of Assessment

The FATF’s 40 Recommendations and 11 Immediate Outcomes were used to evaluate Japan’s AML/CFT measures. The country received an overall rating of “Largely Compliant” (LC), indicating that it is largely in line with technical requirements for AML/CFT measures.

Strengths

• Japan was found to be largely compliant with technical requirements for AML/CFT measures, earning a rating of “Largely Compliant” (LC).
• The country’s Financial Intelligence Unit (FIU) received a rating of “Largely Compliant” (LC), indicating that it is effective in centrally receiving and analyzing information on money laundering and terrorist financing.

Areas for Improvement

• Japan was identified as having room for improvement in several areas, including:
  • Effectiveness of its legal system: Japan received ratings of “Substantial Effectiveness” (SE) for four out of 11 Immediate Outcomes, indicating that its legal system is in place but may require further improvement to effectively combat money laundering and terrorist financing.
  • Development of laws and regulations: Japan’s laws and regulations were found to be partially compliant with FATF standards, earning a rating of “Partially Compliant” (PC). The country was identified as having gaps in its regulatory framework for certain sectors, including:
    • Casinos
    • Real estate agents
    • Dealers in precious metals and stones
    • Lawyers
    • Notaries
    • Accountants

Next Steps

Japan has been classified into one of three groups based on its mutual evaluation report and required follow-up reports. The country is expected to address the improvement of matters pointed out in the technical compliance and immediate outcome ratings to globally enhance AML/CFT measures.

The FATF’s assessment is intended to help countries strengthen their AML/CFT systems and prevent financial crimes. Japan has committed to implementing the necessary improvements to its AML/CFT regime and will be required to submit follow-up reports to demonstrate progress in addressing the identified shortcomings.