Financial Crime World

Here is the rewritten article in Markdown format:

Japan’s Efforts to Combat Money Laundering

Tokyo - Japan has taken significant steps to prevent money laundering and terrorist financing, a crucial aspect of maintaining financial stability and integrity.

Domestic Regulatory Regime

According to officials from the Japanese government, the country has established a comprehensive domestic regulatory regime to deter and detect money laundering. The Act on Prevention of Transfer of Criminal Proceeds imposes customer due diligence (CDD) and other necessary obligations on financial institutions and designated non-financial businesses and professions.

Financial Institutions’ Obligations

Financial institutions in Japan are required to take necessary CDD measures, including:

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

To ensure effectiveness of these obligations, the Financial Services Agency and other competent authorities conduct on-site inspections, focusing on their compliance with the requirements.

Japan Financial Intelligence Center (JAFIC)

The JAFIC, a financial intelligence unit established within the National Police Agency, is responsible for:

  • Collecting, analyzing, and disseminating information on suspicious transactions to investigative authorities in Japan and foreign FIUs
  • Being a member of various international anti-money laundering networks, including:
    • Financial Action Task Force (FATF)
    • Asia/Pacific Group on Money Laundering (APG)
    • Egmont Group

Border Controls and Cash Reporting

Individuals who are departing and entering Japan are required to declare cash border transportation and other negotiable instruments exceeding certain amounts. Financial institutions, including money remitters, must also:

  • Identify the originator of electronic transfers of funds
  • Maintain such information throughout the payment chain
  • Apply enhanced scrutiny to transfers lacking complete information on the originator or beneficiary

Regional and Multilateral Initiatives

Japan’s efforts to combat money laundering have been guided by regional and multilateral initiatives, including FATF Recommendations. The country has also demonstrated its commitment to:

  • Mutual legal assistance
  • Administrative cooperation in cases of money laundering among law enforcement, judicial authorities, and financial regulatory agencies

Challenges Ahead

However, officials acknowledged that Japan still faces challenges in strengthening or improving its measures, including:

  • 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.