Financial Crime World

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

Overview

Japan has a comprehensive AML/CFT regime in place to prevent and combat money laundering (ML) and the financing of terrorism (TF). This regime is governed by various laws, including the Act on Prevention of Transfer of Criminal Proceeds (APTCP), the Act on Punishment of Financing to Offences of Public Intimidation (TF Act), and the Terrorist Asset Freezing Act (TAFA).

Key Components

  • Acts and Regulations: Japan’s AML/CFT/CPF regime is governed by a combination of laws, including:
    • The Act on Prevention of Transfer of Criminal Proceeds (APTCP)
    • The Act on Punishment of Financing to Offences of Public Intimidation (TF Act)
    • The Terrorist Asset Freezing Act (TAFA)

Risk-Based Approach

  • National Risk Assessment: Japan’s National Public Safety Commission prepares and publishes a National Risk Assessment-Follow-up Report (NRA-FUR) to specify and assess ML/TF risks for each category of transactions by specified business operators.

Financial Institutions (FIs)

  • FIs, including:
    • Banks
    • Life insurance companies
    • Non-life insurance companies
    • Financial instruments business operators
    • Money lending business operators
    • Fund transfer services providers
    • Crypto-asset exchange service providers
    • Currency exchange operators
  • Are required to take various risk reduction measures under the AML/CFT/CPF regime.

Designated Non-Financial Businesses and Professions (DNFBPs)

  • DNFBPs, including:
    • Real estate brokers
    • Dealers in precious metals and stones
    • Postal receiving service providers
    • Telephone receiving and forwarding service providers
    • Casino business operators
    • Lawyers
    • Judicial scriveners
    • Certified administrative procedures legal specialists
    • Certified public accountants
    • Certified public tax accountants

Non-Profit Organizations (NPOs)

  • The FATF requires that CFT measures should be applied to NPOs that are vulnerable to misuse for terrorist finance because of their social credibility and financial resources.

Beneficial Ownership

  • System: The government has implemented a system in which notaries verify information on Beneficial Owners before the certification of articles of incorporation.
  • Measures: Measures have been put in place to prevent the misuse of legal persons.

Utilization of FIU

  • Japan’s Financial Intelligence Unit (FIU), named Japan Financial Intelligence Center (JAFIC), collects, organizes, analyzes and disseminates information reported by FIs, etc. to law enforcement agencies in order to support the government’s AML/CFT measures.

Enforcement and Asset Freezing

  • The Strategy to Make Japan the Safest Country in the World calls for using relevant laws to appropriately implement punishments for ML in order to ensure the thorough deprivation of the proceeds of crime, including the proceeds of drug crime, and prevent criminal proceeds from being used for maintaining and expanding criminal organizations including terrorism.