Japan Makes Progress in Improving Anti-Money Laundering and Counter-Terrorist Financing Measures
Tokyo, Japan - Recent Developments
The Financial Action Task Force (FATF) has released a follow-up report on Japan’s progress in strengthening its measures to fight money laundering and terrorist financing. According to the report, Japan has made significant improvements in addressing technical compliance deficiencies identified in its previous Mutual Evaluation Report (MER).
Progress Made
Japan has made sufficient progress in addressing the deficiency related to Recommendation 2, which requires countries to have a clear responsibility for defining anti-money laundering/counter-terrorist financing (AML/CFT) policies informed by risks and regularly reviewed. The country has established an Inter-ministerial Council for AML/CFT & CPF Policy and issued a new National AML/CFT/CPF Action Plan.
Key Improvements
- The council has developed a national policy informed by risks identified in the National Risk Assessment (NRA).
- A task force has been established to promote strengthening of terrorist financing investigation and prosecution, enhance risk understanding on terrorist financing of obliged entities, and improve implementation of asset freezing measures.
- A policy to prevent non-profit organizations from being exploited for terrorism financing is included in the plan.
FATF Re-Rating
The FATF has re-rated Japan as “largely compliant” with Recommendation 2, citing significant progress made by the country in addressing technical compliance deficiencies. However, a minor gap remains regarding data protection, which was identified in the MER.
Overall Assessment
Overall, Japan’s efforts to improve its AML/CFT measures have been deemed sufficient, and the country has been upgraded from “partially compliant” to “largely compliant” with Recommendation 2.
Technical Compliance Ratings
The following table shows Japan’s technical compliance ratings for each of the 40 FATF Recommendations:
| Recommendation | Technical Compliance Rating |
|---|---|
| R.1-R.10 | LC (largely compliant) |
| R.11-R.20 | PC (partially compliant) |
| R.21-R.30 | C (compliant) |
| R.31-R.40 | LC (largely compliant) |
Note: There are four possible levels of technical compliance: compliant (C), largely compliant (LC), partially compliant (PC), and non-compliant (NC).
Conclusion
“The FATF is encouraged by Japan’s progress in strengthening its AML/CFT measures,” said an official at the organization. “We will continue to monitor Japan’s implementation of these measures to ensure that they are effective and efficient.”
Japan will remain in enhanced follow-up and will continue to inform the FATF of its progress in improving the implementation of its AML/CFT measures.