Financial Crime World

Japan Tightens Financial Crime Compliance Regulations

TOKYO, JAPAN - Strengthening Anti-Money Laundering (AML) Measures

In a bid to combat financial crimes and maintain international cooperation, Japan has implemented stringent AML regulations that align with global standards. The country’s AML/CFT regulations have undergone significant revisions in recent years, emphasizing customer due diligence, record-keeping, suspicious transaction reporting, and international cooperation.

Foundational Legislation: Act on Prevention of Transfer of Criminal Proceeds (APTCP)

Introduced in 2007, the APTCP is the cornerstone of Japan’s AML framework. Revisions made in 2016 enhanced customer due diligence measures and expanded the list of specified business operators required to adhere to strict compliance standards.

Key Compliance Requirements for Financial Institutions

  • Verify the identity of customers when establishing business relations or conducting transactions exceeding a certain amount
  • Maintain transaction records for at least seven years
  • Report suspicious transactions to the Japanese Financial Intelligence Centre (JAFIC) if there is suspicion of money laundering or terrorist financing

Additional Regulations and Guidelines

  • Financial Instruments and Exchange Act (FIEA): Focuses on securities-related businesses, requiring customer due diligence measures.
  • Foreign Exchange and Foreign Trade Act (FEFTA): Mandates banks and financial institutions to conduct customer due diligence on overseas remittances exceeding 100,000 yen.

Terrorism Financing Prevention Act

Introduced in 2014, this act specifically addresses the prevention of terrorism financing. It includes provisions for criminalization, sanctions, monitoring and reporting, international cooperation, and asset freezing to prevent terrorist activities.

The Japanese government has taken a proactive stance against financial crimes, emphasizing international cooperation and information exchange to combat money laundering and terrorist financing. The country’s AML/CFT regulations serve as a model for other nations, demonstrating the importance of stringent compliance measures in maintaining global economic integrity.