Financial Crime World

Title: Japan’s Anti-Money Laundering Measures: Achievements and Areas for Improvement

Japan, as a member of the Asia/Pacific Group (APG) and the Financial Action Task Force (FATF), has made considerable strides in implementing policies to combat money laundering and terrorist financing (AML/CFT). This article evaluates Japan’s progress and identifies areas for improvement based on the latest FATF mutual evaluation report (Mer-Japan-2021).

Japan’s Progress in AML/CFT Measures

  1. Customer Due Diligence (CDD):

    • Improved national ID verification system
    • Strengthened Know-Your-Customer (KYC) requirements for banks
    • Increased use of automated customer risk assessment systems

  2. Financial Intelligence Unit (FIU):

    • Established a dedicated anti-terrorist financing desk
    • Expanded FIU, Japan FIU Center, capabilities

Japan’s progress in these areas has been substantial. However, challenges still exist.

Areas for Improvement

  1. Risk Assessments:

    • Insufficient risk assessments in sectors, such as:
      • Real estate
      • Casinos

  2. Beneficial Ownership Transparency:

    • Absence of a legal framework for beneficial ownership transparency

Japan’s Commitment to Addressing Issues

  • Beneficial Ownership Transparency:

    • Plans to amend Financial Instruments and Exchange Act
    • Introduce regulations on beneficial ownership transparency in financial institutions

  • Risk Management Practices:

    • FSA conducted on-site inspections of financial institutions to assess ML/TF risk management

Moving Forward

Japan’s ongoing commitment to strengthening its AML/CFT framework is crucial. By prioritizing measures to mitigate risks in sectors with known vulnerabilities, and working closely with APG and FATF, Japan can ensure continuous improvement in its anti-money laundering efforts.

Conclusion

While Japan’s progress in implementing anti-money laundering measures is noteworthy, improvement is still necessary. Focusing on areas like risk assessments and beneficial ownership transparency will be essential for ensuring a robust AML/CFT framework in Japan.