Financial Crime World

Japan’s Fraudulent Activity Reporting Requirements Come into Force

Tokyo, Japan - April 1st, 2007: A Significant Milestone in Combating Money Laundering and Terrorist Financing

The Act on Prevention of Transfer of Criminal Proceeds came into force on April 1st, 2007, marking a significant milestone in Japan’s efforts to combat money laundering and terrorist financing. This development has led to the establishment of the Japan Financial Intelligence Center (JAFIC) within the Organized Crime Department of the National Police Agency.

The Role of JAFIC

According to its principal role, JAFIC is responsible for:

  • Collecting, arranging, and analyzing suspicious transaction reports (STRs) filed by specified business operators
  • Disseminating such information to public prosecutors and other relevant authorities

As a central agency, JAFIC plays a crucial role in enforcing the law, which makes reporting of suspicious transactions obligatory for various industries, including:

  • Financial institutions
  • Real estate agents
  • Dealers in precious metals and stones

Background: The Need for a More Comprehensive System

The establishment of JAFIC was prompted by the need for a more comprehensive system for handling STRs, particularly given the expanded scope of reporting entities under the new Act. Prior to this, Japan’s first FIU was established within the Financial Supervisory Agency (now reorganized into the Financial Services Agency) in February 2000, but it lacked the capacity to handle the increased volume and complexity of STRs.

Mandate of JAFIC

Under its mandate, JAFIC is responsible for:

  • Collecting and analyzing STRs
  • Disseminating information to foreign FIUs
  • Providing guidance and support to specified business operators to ensure compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations
  • Examining legal systems related to AML/CFT and participating in international discussions on AML standards

Capabilities and Staffing

With a staff of around 90 people under the Director for Prevention of Money Laundering, JAFIC is well-equipped to tackle the challenges of combating financial crime in Japan.

Conclusion

As Japan continues to strengthen its efforts against money laundering and terrorist financing, JAFIC remains a critical component in the fight against these serious threats.