Financial Crime World

Japan’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Measures

Key Legislation

Japan has implemented several key laws to prevent money laundering and terrorist financing. These include:

  • Act on Prevention of Transfer of Criminal Proceeds (APTCP): This act aims to prevent the transfer of criminal proceeds and promotes international cooperation in this area.
  • Terrorist Asset Freezing Act (TAFA): This act allows for the freezing of assets suspected to be linked to terrorist activities.
  • Act on Punishment of Financing to Offences of Public Intimidation (TF Act): This act aims to prevent financing of public intimidation offenses.

Risk-Based Approach

Japan uses a risk-based approach to identify and mitigate money laundering and terrorist financing risks. This involves:

  • Financial Institutions (FIs): FIs are required to conduct customer due diligence, report suspicious transactions, and implement internal controls.
  • Designated Non-Financial Businesses and Professions (DNFBPs): DNFBPs, such as real estate brokers and lawyers, are subject to AML/CFT regulations and must implement risk-based measures.
  • Non-Profit Organizations (NPOs): NPOs are required to report suspicious transactions and implement internal controls.

Beneficial Ownership

To prevent the misuse of legal persons, Japan has implemented measures to identify and verify beneficial owners. These include:

  • Obligation on FIs to perform verification at the time of transactions: FIs must verify the identity of beneficial owners before conducting transactions.
  • Notaries’ verification of BO at the time of legal person incorporation: Notaries are responsible for verifying the identity of beneficial owners when a legal person is incorporated.

Utilization of FIU

Japan’s Financial Intelligence Unit (FIU), Japan Financial Intelligence Center (JAFIC), plays a crucial role in collecting and analyzing suspicious transaction reports, disseminating analysis results to law enforcement agencies, and engaging in international cooperation.

Enforcement and Asset Freezing

To combat money laundering and terrorist financing, Japan uses various laws, including the Anti-Organized Crime Act and the Anti-Terrorism Special Provisions Law. The country also implements asset freezing measures to prevent funds from being used for or flowing to terrorists.

Overall, Japan’s AML/CFT measures are designed to ensure that the financial system is not misused for illicit activities, while also promoting international cooperation and information sharing.