Financial Crime World

Financial Institutions Face Growing Risks of Financial Crime in Japan

Despite Japan’s efforts to combat financial crime, the country remains vulnerable to money laundering, terrorist financing, corruption, and fraud. According to recent reports, money laundering cases increased by 40% in 2018, with cryptocurrencies being a significant contributor to this rise.

The Impact of COVID-19 on Financial Crime

The COVID-19 pandemic has further exacerbated these risks, leading to an increase in non-face-to-face transactions and a surge in suspicious activity reports. The National Police Agency’s “Annual Report on Prevention of Transfer of Criminal Proceeds” revealed that banks were the source of 73.6% of all reported cases, highlighting the need for improved supervision of financial institutions.

Japan’s Laws and Regulations to Combat Financial Crime

Japan has implemented various laws and regulations to combat financial crime, including:

  • Anti-Drug Special Provisions Act: aims to prevent money laundering related to drug trafficking
  • Act on Punishment of Organised Crimes: targets organized crime groups involved in financial crimes
  • Act on Prevention of Transfer of Criminal Proceeds: requires financial institutions to report suspicious transactions

Challenges and Opportunities

However, these laws do not provide for alternative resolutions such as plea agreements or settlement agreements. The country’s FATF status has been a subject of concern, with the Financial Action Task Force highlighting areas that require attention, including:

  • Enhancing supervision of financial institutions
  • Designated non-financial businesses and professions

In response, Japan unveiled a “National AML/CFT/CPF Action Plan” to implement necessary legislative actions effectively.

Collaboration is Key

To address these challenges, collaboration between the public and private sectors is essential. Sanction Scanner’s AML solutions enable institutions to fulfill their obligations while gaining insightful knowledge of the dynamic AML environment unique to Japan. By staying proactive on AML regulations, Japan can maintain its influence in finance and prevent financial crime.