Japan Toughens Stance on Crimes as Predicate Offences for Concealing Drug Crime Proceeds
In a bid to combat organized crime and terrorism, Japan has strengthened its laws to punish those who finance these activities through the concealment of drug crime proceeds.
New Laws and Regulations
The Act on Punishment of Financing to Offences of Public Intimidation (TF Act) criminalizes the collection and provision of terrorist funds. The Terrorist Asset Freezing Act (TAFA), on the other hand, regulates domestic transactions by international terrorists that are not covered by the FEFTA (Funds Transfer Regulation).
Risk-Based Approach
Under Japan’s risk-based approach, the National Public Safety Commission prepares and publishes a report assessing ML/TF risks for each category of transactions by specified business operators. The report analyzes ML cases, suspicious transaction reports, and information held by relevant government agencies.
Financial Institutions
In Japan, financial institutions (FIs) include banks, life insurance companies, non-life insurance companies, financial instruments business operators, money lending business operators, fund transfer services providers, crypto-asset exchange service providers, currency exchange operators, among others. These FIs provide essential financial services that are vulnerable to being used by crime or terrorist organizations for disguising illegal proceeds as legitimate ones or financing terrorism.
To prevent this, FIs are required to take various risk reduction measures, including:
- Customer due diligence
- Reporting of suspicious transactions
- Authorities supervise whether FIs comply with these requirements
Designated Businesses
Designated businesses, such as real estate companies, construction companies, and law firms, are also required to implement anti-money laundering (AML) measures to prevent their businesses from being used for ML/TF purposes.
Beneficial Ownership
Japan has introduced a system where notaries verify the beneficial ownership of corporate customers at the time of legal person incorporation. This aims to prevent organized crime groups or international terrorists from using companies as fronts for illegal activities.
The BO List System also requires stock companies to prepare and submit a document describing information on voting rights held by their beneficial owners.
Financial Intelligence Unit
Japan’s Financial Intelligence Unit (FIU), the Japan Financial Intelligence Center (JAFIC), collects, organizes, analyzes, and disseminates information reported by FIs and other organizations to law enforcement agencies. This helps support the government’s AML/CFT measures.
Enforcement and Asset Freezing
The Japanese government has vowed to use all available laws, including:
- Act on Prohibition of Transfer and Concealment of Criminal Proceeds
- Anti-Drug Special Provisions Law
to punish those who engage in ML/TF activities. This includes freezing assets of terrorists and their associates.
Conclusion
In conclusion, Japan’s latest measures aim to strengthen its efforts against organized crime and terrorism by punishing those who finance these activities through the concealment of drug crime proceeds. The government hopes that these measures will help prevent illegal money transfers and ensure the thorough deprivation of criminal proceeds.