Financial Crime World

Money Laundering Trends Shift as FATF Prioritizes Non-Financial Sectors

=====================================================

The Financial Action Task Force (FATF) has shifted its focus towards identifying and combating money laundering activities within non-financial sectors. This change is reflected in the revised “40 Recommendations” released by the FATF, which expanded the scope of operators required to implement anti-money laundering measures.

History of Changes

In June 2003, the FATF published a revised version of its “40 Recommendations”, which placed greater emphasis on combating money laundering within non-financial sectors. This move recognized that money laundering is no longer limited to traditional financial institutions, but has spread to other sectors, including business and commerce.

The latest revision, published in February 2012, further integrated the nine Special Recommendations into the existing 40 Recommendations to address emerging threats such as weapons of mass destruction proliferation and corruption.

Japan’s AML/CFT Regime Evolves in Response

In response to these changes, Japan has strengthened its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime. Key developments include:

  • 1992: Enforcement of the Anti-Drug Special Provisions Law
    • Criminalized money laundering activities connected with drug crimes
    • Established a suspicious transaction reporting system
  • 2000: Act on Punishment of Organized Crimes
    • Expanded the scope of predicate offenses for money laundering
    • Included other serious crimes besides illegal drug crimes
  • 2002: Act on Punishment of Financing of Offences of Public Intimidation
    • Implemented customer identification requirements for financial institutions
  • 2003: Customer Identification Act
    • Introduced customer identification requirements for financial institutions

Recent Developments

In recent years, Japan has continued to refine its AML/CFT regime. Notable developments include:

  • 2007: Enforcement of the Act on Prevention of Transfer of Criminal Proceeds
    • Transferred the FIU from the Financial Services Agency to the National Public Safety Commission/National Police Agency
  • 2011: Amendment of the Act on Prevention of Transfer of Criminal Proceeds
    • Aimed to address flaws pointed out by the Third FATF Mutual Evaluation
    • Strengthened customer due diligence requirements

Conclusion

The evolving landscape of money laundering has prompted a shift in focus towards non-financial sectors. Japan’s AML/CFT regime has responded to these changes through a series of reforms and updates. As the global fight against money laundering continues, it is essential that countries like Japan remain vigilant and adapt their strategies to combat this complex and ever-changing threat.