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Japan Tackles Drug Crimes and Terrorist Financing through Strengthened Laws
In a bid to combat drug crimes and terrorist financing, Japan has strengthened its laws to crack down on the concealment of illegal proceeds and confiscate assets linked to criminal activities.
Background
The Act on Punishment of Financing to Offences of Public Intimidation (TF Act) was enacted in 2004 to punish the collection and provision of terrorist funds. The Terrorist Asset Freezing Act (TAFA), meanwhile, regulates domestic transactions by international terrorists not covered by the Financial Action Task Force (FATF).
Risk-Based Approach
The National Public Safety Commission prepares a Risk-Base Approach report, which assesses Money Laundering/Terrorist Financing (ML/TF) risks for each category of transactions by specified business operators. This comprehensive risk assessment analyzes ML cases, suspicious transaction reports, and information held by relevant government agencies.
Financial Institutions
Japan’s financial institutions (FIs) are required to take various risk reduction measures, including:
- Customer due diligence
- Reporting of suspicious transactions
Under the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime, authorities supervise FIs’ compliance with these requirements.
Designated Non-Financial Businesses and Professions
The government has designated certain non-financial businesses and professions (DNFBPs), such as:
- Real estate brokers
- Dealers in precious metals and stones
- Lawyers
as specified business operators under the AML/CFT regime. These entities must also implement robust risk management systems to prevent ML/TF.
Beneficial Ownership Verification
FIs are obliged to verify information about beneficial owners of corporate customers at the time of specified transactions with them. Notaries also verify Beneficial Owners’ identities and backgrounds before certifying articles of incorporation for founding legal persons.
Financial Intelligence Unit (FIU)
Japan’s FIU, Japan Financial Intelligence Center (JAFIC), collects, organizes, analyzes, and disseminates information reported by FIs to law enforcement agencies. JAFIC has signed documents with more than 100 foreign countries to establish a framework for information exchange regarding AML/CFT measures.
Enforcement and Asset Freezing
The Japanese government is committed to implementing strict punishments for money laundering (ML) and terrorist financing (TF) to prevent illegal money transfers and ensure the thorough deprivation of criminal proceeds. Asset freezing measures are also in place to prevent funds and assets from being used for or flowing to terrorists.
Conclusion
The strengthening of Japan’s laws and regulations aims to combat drug crimes, terrorist financing, and other related threats, ensuring a safer and more secure environment for its citizens.