Financial Crime World

Japan Faces Rising Risks of Money Laundering and Terrorist Financing Despite Effective Regulations

Introduction

Tokyo, Japan - Despite its reputation for having robust anti-money laundering (AML) regulations, Japan continues to face significant risks of money laundering and terrorist financing. Recent reports indicate a 40% increase in money laundering cases in Japan in 2018, with cryptocurrencies emerging as a major source of this increase.

The Impact of the COVID-19 Pandemic

The global pandemic has further exacerbated these risks, leading to an increase in non-face-to-face transactions. According to the National Police Agency’s “Annual Report on Prevention of Transfer of Criminal Proceeds (2021)”, there were 530,150 reports of suspicious transactions in 2021, with banks accounting for a staggering 73.6% of these cases.

Japan’s AML Laws and Regulations

Japan has a comprehensive framework of laws and regulations aimed at preventing money laundering and terrorist financing, including:

Key Legislation

  • The Act on Special Provisions for the Narcotics and Psychotropics Control Act, etc, and Other Matters for the Prevention of Activities Encouraging Illicit Conduct and Other Activities Involving Controlled Substances through International Cooperation (Act No. 94 of 1991)
  • The Act on Punishment of Organised Crimes and Control of Crime Proceeds (Act No. 136 of 1999)
  • The Act on Prevention of Transfer of Criminal Proceeds (Act No. 22 of 2007)

These laws provide for criminal penalties, including imprisonment and fines, for individuals found guilty of money laundering and terrorist financing.

Japan’s FATF Status

On August 30, 2021, the Financial Action Task Force (FATF) released its 4th round of Mutual Evaluation Report (MER) on Japan’s AML/CFT efforts. The report highlighted Japan’s improvements in certain areas but also identified areas that require more attention.

Anti-Money Laundering Solutions for Japan

Given Japan’s significant influence in finance, maintaining a proactive stance on AML regulations is crucial. Sanction Scanner offers expertise in fulfilling AML obligations while gaining insightful knowledge of the dynamic AML environment unique to Japan.