Financial Crime World

Japan Enhances Anti-Money Laundering Efforts with Comprehensive Measures

To prevent money laundering and terrorist financing, Japan has implemented a comprehensive domestic regulatory and oversight regime. This regime is designed to ensure that financial institutions and designated non-financial businesses and professions are equipped to detect and prevent illegal activities.

Establishing a Strong Regulatory Framework

Japan’s Act on Prevention of Transfer of Criminal Proceeds imposes obligations on financial institutions and designated non-financial businesses and professions to perform customer due diligence (CDD) and other necessary measures. These measures include:

  • Customer and beneficial owner identification
  • Maintaining information obtained by the measures and transaction records
  • Reporting suspicious transactions to the Financial Intelligence Unit

Effective Oversight and Enforcement

To ensure the effectiveness of these obligations, on-site inspections are conducted by the Financial Services Agency and other competent authorities. This ensures that financial institutions are adhering to the regulations and implementing effective anti-money laundering (AML) programs.

Strengthening Financial Intelligence

Japan has established a financial intelligence unit (FIU), the Japan Financial Intelligence Center (JAFIC), which is responsible for:

  • Collecting, arranging, analyzing, and disseminating information on suspicious transactions to investigative authorities in Japan and foreign FIUs
  • Supervision by the National Public Safety Commission
  • Membership in the Egmont Group since 2000

Enhancing Transparency and Disclosure

Japan requires individuals and businesses to declare and disclose cash border transportation and other negotiable instruments. Financial institutions are also required to:

  • Meaningfully identify the originator of electronic transfers
  • Maintain such information throughout the payment chain

Regional and Multilateral Cooperation

Japan is a member of regional and multilateral anti-money laundering initiatives, including:

  • The Financial Action Task Force (FATF) Recommendations
  • The Asia-Pacific Group on Money Laundering (APG)
  • Sending officials from JAFIC to annual meetings and typology studies to share information and analyze the latest money laundering trends

Japan demonstrates use of mutual legal assistance, administrative or judicial cooperation in cases of money laundering among:

  • Law enforcement authorities
  • Judicial authorities
  • Financial regulatory authorities

The country exchanges information on money laundering with other countries through Interpol and provides/receives evidence via central authorities designated in MLAT or MLAA concluded with them.

Challenges and Future Plans

Despite these efforts, Japan faces challenges such as:

  • Financial and technical capacity challenges with regard to the ability of agencies involved in combating money laundering to cooperate and exchange information at the national and international levels
  • Coordination challenges among relevant agencies responsible for combating money laundering with regard to global, regional, and bilateral cooperation

To strengthen its anti-money laundering efforts, Japan is seeking technical assistance in the form of training programs and capacity-building initiatives.

Conclusion

Japan’s comprehensive approach to preventing money laundering and terrorist financing demonstrates its commitment to combating these serious threats to financial stability and national security. The country’s efforts are aimed at creating a strong regulatory framework, effective oversight and enforcement, strengthening financial intelligence, enhancing transparency and disclosure, and promoting regional and multilateral cooperation.