Financial Crime World

Japan Takes Steps to Prevent Money Laundering, Detects Suspicious Transactions

Comprehensive Regulatory Regime

Japan has established a comprehensive domestic regulatory and oversight regime to prevent money laundering and detect suspicious transactions. The country’s Act on Prevention of Transfer of Criminal Proceeds imposes obligations on financial institutions, including:

  • Customer due diligence measures
  • Accurate record-keeping
  • Reporting mechanisms for suspicious transactions

Financial Institution Requirements

Financial institutions in Japan are required to take necessary customer due diligence measures, including:

  • Identifying customers and beneficial owners
  • Maintaining transaction records
  • Reporting suspicious transactions to the Financial Intelligence Unit (FIU)

The Financial Services Agency and other competent authorities conduct on-site inspections to ensure compliance with these requirements.

Cooperation and Information Exchange

Japan has established the Japan Financial Intelligence Center (JAFIC) to facilitate cooperation and information exchange at national and international levels. JAFIC is responsible for:

  • Collecting, analyzing, and disseminating information on suspicious transactions
  • Providing information to investigative authorities in Japan and foreign financial intelligence units

Japan is also an active member of anti-money laundering networks, including:

  • Financial Action Task Force (FATF)
  • Asia-Pacific Group on Money Laundering (APG)
  • Egmont Group

The country requires individuals and businesses to declare cash border transportation and other negotiable instruments, and has implemented measures to identify the originator of electronic transfers.

Regional and Multilateral Initiatives

Japan has referred to regional and multilateral anti-money laundering initiatives in its legal framework for combating money laundering and financing of terrorism.

Strengthening Measures

To further strengthen its measures against money laundering, Japan is working to:

  • Improve coordination among relevant agencies responsible for combating money laundering
  • Enhance global, regional, and bilateral cooperation

However, the country faces challenges in monitoring the compliance of banks and other reporting entities with anti-money laundering preventive measures.

Technical Assistance

Japan has not received or requested any technical assistance in relation to its measures against money laundering.