Financial Crime World

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Japan’s Counter-Measures Against Money Laundering and Terrorist Financing

In Japan, a legal person refers to any organization or arrangement that primarily engages in raising or disbursing funds for specified non-profit activities or good works. This definition forms the foundation of Japan’s counter-measures against money laundering (ML) and terrorist financing (TF).

Beneficial Ownership (BO)

Beneficial ownership is defined as the natural person who ultimately owns or controls a legal person. In Japan, this includes anyone who directly or indirectly holds more than one-fourth of the voting rights of a legal person.

Key Points about Beneficial Ownership:

  • Direct or indirect holders of more than 25% of voting rights are considered beneficial owners.
  • Financial institutions and other specified business operators must verify information about beneficial owners at the time of transactions.
  • Notaries must ask clients to report information on beneficial owners when founding a legal person.

Obligation to Verify BO

Financial institutions and other specified business operators are required to verify information about beneficial owners of corporate customers at the time of transactions with them. This ensures that financial institutions can accurately identify and assess the risk of money laundering and terrorist financing activities.

Verification by Notaries

When founding a legal person, notaries must ask clients to report information on beneficial owners and verify that they do not belong to an organized crime group or international terrorist organization. This helps prevent individuals with malicious intentions from using legal persons for illicit activities.

BO List System

Upon request from a stock company, the registrar verifies the list of voting rights held by beneficial owners and issues a copy of the list. This system facilitates accurate tracking and monitoring of beneficial ownership information.

Utilization of FIU

Japan’s Financial Intelligence Unit (FIU) collects, organizes, analyzes, and disseminates information reported by financial institutions to law enforcement agencies, supporting AML/CFT measures. The FIU plays a crucial role in identifying and disrupting money laundering and terrorist financing activities.

Enforcement and Asset Freezing

The Japanese government uses relevant laws to implement punishments for ML, ensuring the thorough deprivation of criminal proceeds and preventing their use for maintaining or expanding criminal organizations. This demonstrates Japan’s commitment to combating money laundering and terrorist financing effectively.