Financial Crime World

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

Risk-Based Approach

The National Public Safety Commission publishes the National Risk Assessment-Follow-up Report (NRA-FUR), which assesses ML/TF risks for each category of transactions by specified business operators.

  • This report is a critical component in identifying and mitigating potential money laundering and terrorist financing threats.
  • By taking a risk-based approach, Japan’s AML/CFT measures are tailored to address specific vulnerabilities and priorities.

Financial Institutions (FIs)

Financial institutions, including banks and other financial service providers, are required to take risk reduction measures such as:

  • Customer Due Diligence: Conducting thorough background checks on customers to verify their identity and assess potential risks.
  • Reporting Suspicious Transactions: Filing reports with the Financial Intelligence Unit (FIU) when suspicious transactions are detected.

Designated Non-Financial Businesses and Professions (DNFBPs)

DNFBPs, including real estate brokers and lawyers, are also subject to AML/CFT measures. Guidelines and inspections are tailored to their specific industries and characteristics.

  • This ensures that DNFBPs are equipped with the necessary knowledge and resources to identify and report suspicious transactions.
  • Regular inspections help maintain compliance and prevent potential money laundering and terrorist financing activities.

Non-Profit Organizations (NPOs)

Japan’s CFT measures target NPOs that may be vulnerable to misuse for terrorist financing due to their social credibility and financial resources.

  • This includes verifying information about beneficial owners at the time of transactions and upon incorporation.
  • Strict regulations are in place to prevent the misuse of legal persons and maintain transparency within NPOs.

Financial Intelligence Unit (FIU)

Japan’s FIU, JAFIC, collects and analyzes suspicious transaction reports to support law enforcement agencies in combating ML/TF.

  • The FIU plays a crucial role in identifying patterns and trends related to money laundering and terrorist financing.
  • This information is used to inform policy decisions and enhance the effectiveness of AML/CFT measures.

Enforcement and Asset Freezing

Strict measures are taken against ML/TF, including investigation, prosecution, and asset freezing, to prevent illegal money transfers and maintain the integrity of Japan’s financial system.

  • Asset freezing ensures that illicit funds are not used for further malicious activities.
  • Investigation and prosecution efforts help bring perpetrators to justice and deter others from engaging in similar activities.