Financial Crime World

FATF Revisions Spark Changes in Japan’s AML/CFT Regime

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The Financial Action Task Force (FATF) has been revising its 40 Recommendations several times since its inception, aimed at combating money laundering and terrorist financing. In this article, we will explore how Japan has responded to these revisions and the changes it has made to its anti-money laundering (AML) and counter-terrorism financing (CFT) regime.

Japan’s AML/CFT Regime

The Japanese government has been actively implementing AML/CFT measures since the early 1990s. 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.

Key Milestones

  • 1996: Japan enacts the “Act on Punishment of Organized Crimes” in response to FATF’s recommendations.
  • February 2000: The law extends the scope of predicate offenses for money laundering and introduces a broader range of criminal proceeds subject to reporting requirements.
  • July 2002: Japan enacts the “Act on Punishment of Financing of Offences of Public Intimidation” to combat terrorist financing.
  • January 2003: Japan introduces the “Customer Identification Act,” which requires financial institutions to identify their customers and report suspicious transactions related to terrorist financing.

Revised AML/CFT Regime

In response to the FATF’s revised recommendations in June 2003, Japan enacted the “Act on Prevention of Transfer of Criminal Proceeds” in March 2007. This law expanded the scope of business operators required to implement customer identification and introduced new measures to prevent the transfer of criminal proceeds.

Key Provisions

  • Expands the scope of business operators required to implement customer identification
  • Introduces new measures to prevent the transfer of criminal proceeds
  • Strengthens existing regulations to combat money laundering and terrorist financing

Ongoing Efforts

Japan continues to strengthen its AML/CFT regime to combat money laundering and terrorist financing. In January 2010, the National Police Agency established a meeting of business operators on customer due diligence for measures against money laundering.

Recent Developments

  • April 2011: A bill is submitted to amend the Act on Prevention of Transfer of Criminal Proceeds in response to flaws pointed out by the Third FATF Mutual Evaluation.
  • January 2013: The amended law comes into effect, strengthening Japan’s AML/CFT regime.

Conclusion

Japan has made significant efforts to strengthen its AML/CFT regime in response to FATF revisions. From introducing new laws and regulations to ongoing efforts to improve customer due diligence practices, Japan continues to demonstrate its commitment to combating money laundering and terrorist financing.