Financial Crime World

Japan Tackles Money Laundering: Strict Laws and Tough Penalties

In a bid to combat money laundering, Japan has introduced stringent laws and penalties that aim to root out illicit financial transactions. The country’s Anti-Drug Special Provisions Act and the Act on Punishment of Organised Crimes form the backbone of its anti-money laundering (AML) regime.

Key Provisions

  • Both natural and legal persons can be prosecuted for money laundering, with the offence defined as concealing or disguising the origin or nature of proceeds derived from drug-related crimes or organised crime.
  • The laws require intention or knowledge, ruling out strict liability or negligence standards.
  • Financial institutions or businesses can be held liable if they knowingly assist customers in concealing or receiving illicit funds.

Predicate Offences

The list of predicate offences has been expanded to include corporate crimes such as tax evasion and price cartels. This amendment aims to strengthen Japan’s AML measures and align with international standards set by the United Nations Convention against Transnational Organised Crime.

Penalties and Forfeiture

  • Amended statutory penalties now range from imprisonment for up to 10 years or a fine of up to ¥5 million, depending on the type of money laundering activity.
  • The court may order forfeiture of crime proceeds, including cryptoassets, and collection of an equivalent value if the illicit funds have been consumed or transferred.

Victim Compensation

The government will convert forfeited property into money and distribute it to victims. However, this process can be complex, and damages claimed by victims must be considered.

Limitation Periods

The limitation period for money laundering prosecutions varies between three and five years, depending on the maximum sentence of the offence.

International Cooperation

Japan’s AML laws have extraterritorial reach, applying to non-citizens and non-residents involved in illicit financial activities within the jurisdiction. The country is committed to strengthening its anti-money laundering measures and adhering to international standards.