Financial Crime World

Japan Fights Money Laundering with Improved Detection Methods Amid Rising Cases

Introduction

Despite efforts to combat financial crime, money laundering cases have increased significantly in Japan. The COVID-19 pandemic has led to more non-face-to-face transactions and heightened risks of money laundering and terrorist financing. In this article, we will explore the current situation and measures taken by Japan to improve its detection methods.

Money Laundering Cases on the Rise

According to the National Police Agency’s “Annual Report on Prevention of Transfer of Criminal Proceeds (2021)”, there was a steady increase in reports of suspicious transactions starting from 2016. In 2021, a total of 530,150 cases were reported, with banks being the primary source of these reports (73.6%).

Laws and Regulations

Japan has established laws and regulations to combat money laundering, including:

  • Act on Special Provisions for the Narcotics and Psychotropics Control Act
  • Act on Punishment of Organised Crimes
  • Act on Prevention of Transfer of Criminal Proceeds

These laws provide a framework for preventing and detecting money laundering activities.

FATF Evaluation and Action Plan

Japan’s Financial Action Task Force (FATF) status was evaluated in 2021, with the report highlighting improvements compared to its previous evaluation in 2008. However, areas requiring attention were also identified, including:

  • Enhancing supervision of financial institutions and designated non-financial businesses and professions
  • Improving cooperation between public and private sectors

In response, the Japanese government has unveiled a three-year National AML/CTF/CBP Action Plan to implement necessary legislative actions effectively.

Collaboration and Swift Implementation

Collaboration between the public and private sectors is crucial to achieving Japan’s AML objectives. The FATF’s Second 12-Month Review Report on Standards for Virtual Assets and Virtual Asset Service Providers emphasizes the importance of swift implementation of FATF standards by both the public and private sectors to avoid regulatory loopholes.

Conclusion

Maintaining a proactive stance on AML regulations is crucial, especially in Japan’s significant influence in finance. Sanction Scanner offers expertise in fulfilling AML obligations while providing insightful knowledge of Japan’s unique AML environment. Learn how Sanction Scanner’s AML solutions can influence compliance in Japan and beyond by contacting us for a demonstration today.

Key Points

  • Money laundering cases have increased by 40% to 511 in 2018
  • Cryptocurrencies are a major source of this surge
  • Banks were the primary source of reports of suspicious transactions (73.6%)
  • Japan has established laws and regulations to combat money laundering
  • The Japanese government has unveiled a three-year National AML/CTF/CBP Action Plan to implement necessary legislative actions effectively
  • Collaboration between public and private sectors is crucial to achieving AML objectives