Financial Crime World

Japan Cracks Down on Financial Crime: Understanding the Sentencing Landscape

Introduction

As Japan continues to strengthen its anti-money laundering (AML) measures, the country’s financial crime sentencing landscape is becoming increasingly severe. In recent years, the government has introduced tougher penalties for those found guilty of money laundering and related offenses.

Types of Financial Crimes with Corresponding Sentences

  • Concealment of drug crime proceeds: Up to 10 years in prison or a fine of up to ¥5 million (approximately $45,000 USD)
  • Receipt of drug crime proceeds: Up to seven years in prison or a fine of up to ¥3 million (approximately $28,000 USD)
  • Managing an enterprise by the use of criminal proceeds: Up to 10 years in prison or a fine of up to ¥10 million (approximately $90,000 USD)
  • Concealment of crime proceeds: Up to 10 years in prison or a fine of up to ¥5 million (approximately $45,000 USD)
  • Receipt of crime proceeds: Up to seven years in prison or a fine of up to ¥3 million (approximately $28,000 USD)

Forfeiture and Asset Freezing

To ensure the forfeiture of crime proceeds, the court may issue a protective order that prohibits the disposing of crime proceeds before the prosecution. The court may also issue such an order after the prosecution.

In response to the Financial Action Task Force’s recommendations, the Act on Punishment of Organised Crimes was amended in 2022 to enable the court to order the forfeiture of cryptoassets as crime proceeds.

Victim Compensation

The court may not order the forfeiture of a crime victim’s property (crime proceeds obtained from victims through crimes relating to property) because it would cause an obstruction to damages claimed by victims. However, the court may forfeit a crime victim’s property if it is difficult for the victim to recover damages by executing the right to seek damages or other rights.

Limitation Periods on Money Laundering Prosecutions

The limitation period governing money laundering prosecutions varies according to the maximum sentence of money laundering activities:

  • Three years: For offenses with a maximum sentence of less than three years
  • Five years: For offenses with a maximum sentence of up to five years
  • Seven years: For offenses with a maximum sentence of more than seven years