Financial Crime World

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Japan Steps Up Efforts to Combat Money Laundering and Terrorist Financing

TOKYO, JAPAN - In a bid to strengthen its anti-money laundering (AML) and counter-terrorist financing (CFT) measures, Japan has made significant strides in recent years. The country’s efforts have been guided by the Financial Action Task Force (FATF), an intergovernmental organization that sets standards for combating money laundering and terrorist financing.

Key Developments

  • 1992: Japan enacted the Anti-Drug Special Provisions Law, which criminalized money laundering activities connected with drug crimes and established a suspicious transaction reporting system for financial institutions.
  • 2000: The country implemented the Act on Punishment of Organized Crimes, which expanded the scope of predicate offenses for money laundering to include other serious crimes besides illegal drug crimes.
  • 2002: Japan enacted the Act on Punishment of Financing of Offences of Public Intimidation, which aimed to combat terrorist financing. The law was revised in 2003 to include terrorist funding as a criminal offense and to require financial institutions to report suspicious transactions related to assets suspected of terrorist financing.

Recent Developments

  • 2007: Japan enacted the Act on Prevention of Transfer of Criminal Proceeds, which transferred the country’s Financial Intelligence Unit (FIU) from the Financial Services Agency to the National Public Safety Commission.
  • The law also extended the scope of application to business operators required to implement customer identification and reporting measures. Partial enforcement began in 2007, with full implementation taking place in 2008.

Ongoing Efforts

  • Japan has continued to strengthen its AML/CFT regime by addressing flaws pointed out by the FATF’s Third Mutual Evaluation.
  • The country has also implemented measures to combat furikome fraud, a type of financial crime that involves the use of call forwarding services and savings passbooks.

Conclusion

Japan’s efforts to combat money laundering and terrorist financing have been guided by the FATF’s revised recommendations. The country’s recent developments demonstrate its commitment to strengthening its AML/CFT regime and addressing emerging threats in the financial sector.