FATF Revises “The 40 Recommendations” to Combat Money Laundering and Terrorist Financing

In June 2003, the Financial Action Task Force (FATF) revised its 40 Recommendations to combat money laundering and terrorist financing. The revisions aimed to extend the scope of operators required to take measures, including customer identification, to prevent financial crimes.

Japan’s Anti-Money Laundering Regime

Japan has been developing its anti-money laundering regime in line with international initiatives. In 1992, Japan enacted the “Anti-Drug Special Provisions Law” to criminalize money laundering activities connected with drug crimes and establish a suspicious transaction reporting system for financial institutions.

Enforcement of Key Laws

In February 2000, Japan enforced the “Act on Punishment of Organized Crimes,” which extended the scope of predicate offenses for money laundering and designated the Financial Supervisory Agency as the country’s Financial Intelligence Unit (FIU).

Implemented International Convention for the Suppression of the Financing of Terrorism
Designated Financial Intelligence Unit (FIU)
Extended scope of predicate offenses for money laundering

Following the terrorist attacks in the US, Japan enacted the “Act on Punishment of Financing of Offences of Public Intimidation” in July 2002 to implement the International Convention for the Suppression of the Financing of Terrorism. The law also included terrorist financing offenses as predicate crimes and required financial institutions to report suspicious transactions related to assets suspected of terrorist financing.

Implemented customer identification requirements under FATF Recommendations
Included terrorist financing offenses as predicate crimes
Required financial institutions to report suspicious transactions

In January 2003, Japan enacted the “Customer Identification Act,” which implemented customer identification requirements under the FATF Recommendations and the International Convention for the Suppression of the Financing of Terrorism.

Recent Developments

In December 2011, Japan enacted an amendment to the “Act on Prevention of Transfer of Criminal Proceeds” to address flaws pointed out by the Third FATF Mutual Evaluation. The amended law strengthened customer due diligence requirements and introduced sanctions for businesses that fail to comply with anti-money laundering regulations.

Strengthened customer due diligence requirements
Introduced sanctions for non-compliance

The Japanese government has also taken steps to address the ongoing issue of Furikome Fraud, which involves the use of call forwarding services to launder money. In April 2013, the “Act on Prevention of Transfer of Criminal Proceeds” was fully enforced, implementing stricter requirements for businesses to identify their customers and report suspicious transactions.

Conclusion

Overall, Japan has made significant progress in developing its anti-money laundering regime, incorporating international standards and best practices to combat financial crimes and protect its economy.