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BANKING REGULATIONS FOR COMBATING FINANCIAL CRIME IN JAPAN REACH RECORD HIGH
A total of 583,317 transactions were reported as suspected cases of money laundering in Japan last year, a record high increase of 53,167 from the previous year. Financial institutions and businesses involved can unknowingly become entangled in these illicit activities, resulting in severe penalties and damage to their reputation.
WHAT IS MONEY LAUNDERING?
According to Japan’s National Police Agency, money laundering is the act of disguising criminal proceeds so that their source and true ownership are obscured. This enables organized crime groups to finance their activities and operations without detection.
Money Laundering Process
- Placement: Introduces criminal proceeds into the financial system
- Layering: Moves funds to obscure their origins
- Integration: Reintroduces the laundered funds into economic activity
DOES MONEY LAUNDERING CONSTITUTE A CRIMINAL ACT?
Money laundering is prohibited by law in Japan under the Act on Punishment of Organized Crimes and the Anti-Drug Special Provisions Law. Enforcement is strengthened through laws such as the Act on Prevention of Transfer of Criminal Proceeds, which provides for increased penalties.
EXAMPLES OF MONEY LAUNDERING IN JAPAN
Money laundering can take various forms in Japan, with domestic exchange transactions being the most commonly misused. Other examples include:
- Cash
- Bank deposit
- Credit card
- Electronic money transactions
- Crypto assets
Case Studies
Impersonating Someone Else to Sell Electronic Money
A group of males in the consulting business created a listing on an electronic money trading website under the name of a limited liability company operated by someone else. They then sold the rights, pretending to be that individual.
Concealing Assets Using a Crypto Address
A male company employee purchased crypto assets with criminal proceeds deposited into his own bank account. He then transferred them to a crypto address managed by an unidentified individual.
Cross-Border Concealment of Funds
A male company executive transferred criminal proceeds obtained through fraud to a bank account that he had opened in another country. In doing so, he submitted a false invoice to a bank in Japan, disguising it as a legitimate commercial transaction.
MEASURES TO PREVENT MONEY LAUNDERING
Financial institutions are strengthening their measures to prevent money laundering, including:
- Verification of transaction details and customer identity
- Sending documents such as the Confirmation of Purpose of Transaction, Confirmation of Customer Information, and Confirmation of Delivery Details to users
Consequences of Ignoring Customer Information Verification Requests
If a user ignores these requests, the financial institution may refuse to fulfil its obligations related to the transaction until the customer has complied with the verification process. If no response is received, the transaction may be halted or restricted.
DISCLAIMER
The content in this article should not be construed as legal or tax advice. Readers are advised to seek the advice of a competent lawyer or accountant licensed to practise in their jurisdiction for advice on their particular situation.