Japan Falls Short in Combating Money Laundering and Terrorist Financing Despite Progress, Says Global Watchdog

A recent review by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering has revealed that Japan’s efforts to combat money laundering and terrorist financing have been yielding results, but there is still room for improvement in certain areas.

Understanding the Risks

According to the Mutual Evaluation Report released last month, Japanese authorities have a good understanding of the risks they face from money laundering and terrorist financing, particularly from organized crime groups such as the notorious Boryokudan. The report highlights Japan’s ability to identify and assess these risks, which is essential in developing effective strategies to combat them.

Efforts and Progress

The report praised Japan’s efforts in collecting and using financial intelligence to investigate and prosecute money laundering and terrorist financing crimes. Additionally, Japanese authorities have demonstrated constructive cooperation with foreign counterparts in this area.

Areas for Improvement

However, the report also identified several areas where improvement is needed:

• Prioritizing Complex Cases: Law enforcement officials must prioritize combating the laundering of proceeds from complex cases involving fraud and drug-related crimes, including those linked to organized crime groups.
• Confiscating Criminal Proceeds: Japanese authorities need to increase efforts in confiscating criminal proceeds and prevent the unwitting facilitation of sanctions evasion by ensuring effective implementation of measures to prevent proliferation financing.
• Virtual Assets and Service Providers: The country needs to fully implement measures to prevent the abuse of virtual assets and their service providers.
• Financial and Non-Financial Institutions: Japan must improve the requirements for financial and non-financial institutions to prevent money laundering and terrorist financing, including customer due diligence and access to beneficial ownership information to prevent the misuse of legal persons and arrangements.

Conclusion

While Japan has made progress in combating money laundering and terrorist financing, there is still much work to be done. By addressing these areas for improvement, Japanese authorities can strengthen their efforts and ensure a safer and more secure financial system for all.