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Japan Seeks to Strengthen Anti-Money Laundering Laws in 2022

A record high of 583,317 transactions were reported as suspected cases of money laundering by financial institutions in Japan last year. This increase underscores the need for businesses and individuals to be aware of the risks of unknowingly getting involved in money laundering.

Money Laundering Defined and Prohibited by Law

According to Japan’s National Police Agency website, money laundering is defined as disguising criminal proceeds so that their source and true ownership are obscured. The Financial Action Task Force (FATF) has implemented global measures to combat money laundering, and Japan has enacted laws such as the Act on Punishment of Organised Crimes and the Anti-Drug Special Provisions Law.

The Money Laundering Process

The process typically involves three stages:

  • Placement: introducing criminal proceeds into the financial system
  • Layering: moving funds to obscure their origins
  • Integration: reintroducing the funds into economic activity through seemingly legitimate means

Examples of Money Laundering in Japan

In 2022, several major cases of money laundering were reported in Japan. These included:

  • A group that sold electronic money swindled by sophisticated fraudulent actors under the name of an individual company
  • Another case where a male employee purchased crypto assets with criminal proceeds deposited into his own bank account

Banks Requesting Transaction Details for Verification

Financial institutions are strengthening measures to prevent money laundering by verifying transaction details and customer identity. Banks send users documents such as:

  • Confirmation of Purpose of Transaction
  • Confirmation of Customer Information

in accordance with the Act on Prevention of Transfer of Criminal Proceeds.

If Customer Information Verification Requests Are Ignored

If a bank receives no response from a customer regarding verification requests, it may refuse to fulfill its obligations related to the transaction. The government is urging people to respond within the given deadline when they receive such documents from financial institutions.

Please contact a competent lawyer or accountant licensed to practise in your jurisdiction for more information and legal advice on anti-money laundering laws and regulations.