Financial Crime World

Japan’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Policies

Risk-Based Approach

Japan takes a risk-based approach to anti-money laundering (AML) and combating the financing of terrorism (CFT). This involves assessing money laundering/terrorist financing (ML/TF) risks for each category of transactions by specified business operators.

  • The National Public Safety Commission prepares and publishes the National Risk Assessment-Follow-up Report, which assesses ML/TF risks for each category of transactions by specified business operators.
  • Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs), and Non-Profit Organizations (NPOs) are subject to this risk-based approach.

Beneficial Ownership

Japan requires FIs, DNFBPs, and NPOs to verify information about beneficial owners of corporate customers at the time of specified transactions. This helps prevent money laundering and terrorist financing activities.

  • Notaries must verify Beneficial Owner information when certifying articles of incorporation for founding legal persons.
  • Verifying beneficial ownership information is crucial in identifying and preventing suspicious transactions.

Utilization of FIU

Japan’s Financial Intelligence Unit (JAFIC) plays a vital role in collecting, organizing, analyzing, and disseminating information reported by FIs, DNFBPs, and NPOs to law enforcement agencies. This helps identify and investigate potential ML/TF activities.

  • JAFIC collects and analyzes reports from FIs, etc. to identify patterns and trends in ML/TF activities.
  • The unit disseminates information to law enforcement agencies to facilitate investigations and prosecutions.

Enforcement and Asset Freezing

Japan has robust measures in place to enforce AML/CFT regulations and prevent the use of funds for terrorist activities.

  • Investigation, prosecution, and punishment are enforced against individuals and entities involved in ML/TF activities.
  • Asset freezing measures are implemented to prevent funds and other assets from being used for or flowing to terrorists.