Japan’s Efforts to Combat Financial Crime Receive Thumbs Up from Global Watchdogs
TOKYO/PARIS - Japan’s measures to combat money laundering and terrorist financing have been deemed effective by global authorities. However, the country has been told it needs to prioritize efforts in several areas to further improve its anti-money laundering and counter-terrorist financing (AML/CFT) framework.
FATF Review Praises Japan’s Efforts
The Financial Action Task Force (FATF), an intergovernmental organization that sets standards for AML/CFT measures, recently released a comprehensive review of Japan’s AML/CFT system. The report praised authorities in Japan for their good understanding of the money laundering and terrorist financing risks they face, as well as their efforts to address these risks through effective cooperation with other countries.
Key Areas of Improvement
While Japan has been at the forefront of AML/CFT measures in areas that present major risks for the country, such as the collection and use of financial intelligence to investigate and prosecute money laundering and terrorist financing, there are several key areas where Japan needs to improve its efforts.
1. Laundering of Proceeds from Complex Large-Scale Cases
The report noted that law enforcement agencies in Japan need to focus more on addressing risks associated with the laundering of proceeds from complex large-scale cases involving fraud and drug-related crimes, including the activities of organized crime groups such as the Boryokudan.
2. Improving Requirements for Financial Institutions
The report highlighted the need for Japan to improve its requirements for financial and non-financial institutions to prevent money laundering and terrorist financing, including:
- Customer due diligence
- Access to beneficial ownership information
3. Preventing Sanctions Evasion and Abuse of Virtual Assets
The FATF report also noted that Japan needs to ensure effective implementation of measures to prevent the unwitting facilitation of sanctions evasion and fully implement measures to prevent the abuse of virtual assets.
Roadmap for Improvement
The FATF adopted the report at its June 2021 plenary meeting, which was attended by representatives from member countries, including Japan. The report’s findings are expected to serve as a roadmap for Japan to further improve its AML/CFT framework and address the global community’s concerns on financial crime.