Financial Crime World

Here is the converted article in Markdown format:

FATF Revisions and Japan’s AML/CFT Regime: A Timeline of Developments

Introduction

The Financial Action Task Force (FATF) has been revising its “40 Recommendations” to combat money laundering and financing of terrorism. This article provides a timeline of developments in Japan’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regime, highlighting key milestones and responses to FATF’s recommendations.

Early Developments

  • June 2003: The FATF revises its “40 Recommendations” to extend the scope of operators required to take measures, including customer identification, to combat money laundering.
  • February 2012: The FATF integrates its nine Special Recommendations into the existing FATF 40 Recommendations to address new issues, such as financing of proliferation of weapons of mass destruction and corruption by effectively distributing limited resources.

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

  • 1992: Japan enacts the “Anti-Drug Special Provisions Law” to implement the UN New Narcotics Convention, aiming to combat proceeds from drug crimes. The law criminalizes money laundering activities connected with drug crimes and establishes a suspicious transaction reporting system for financial institutions.
  • 1994: FATF conducts its first mutual evaluation of Japan, pointing out limitations in predicate offenses for money laundering. This leads to the need for further legislation.
  • 2000: Japan enacts the “Act on Punishment of Organized Crimes” to extend the scope of predicate offenses for money laundering and suspicious transaction reporting to include serious crimes beyond drug-related offenses.
  • 2002: Japan enacts the “Act on Punishment of Financing of Offences of Public Intimidation” to implement the International Convention for the Suppression of the Financing of Terrorism. The law includes terrorist financing as a predicate offense and requires financial institutions to report suspicious transactions related to assets suspected of terrorist financing.
  • 2003: Japan enacts the “Customer Identification Act” to implement customer identification requirements under the FATF Recommendations and the International Convention for the Suppression of the Financing of Terrorism.

Recent Developments

  • 2004: The Japanese government revises the Customer Identification Act to include sanctions against acts of selling or buying passbooks and to prevent unauthorized use of deposit accounts.
  • 2005: Japan’s “Headquarters for Promotion of Measures Against Transnational Organized Crime and International Terrorism” publicizes an action plan to implement FATF’s revised recommendations, including the need to extend customer identification requirements to non-financial businesses.
  • 2007: Japan enacts the “Act on Prevention of Transfer of Criminal Proceeds” to implement FATF’s revised recommendations. The law extends customer identification requirements to non-financial businesses and establishes a financial intelligence unit (FIU).
  • 2010: Experts and business operators discuss customer due diligence measures against money laundering, leading to a report highlighting ongoing issues with illicit transfers of savings passbooks.
  • 2011: Japan amends the Act on Prevention of Transfer of Criminal Proceeds to address ongoing issues with Furikome Fraud and other crimes. The law is fully enforced in April 2013.

Conclusion

Throughout its AML/CFT regime development, Japan has worked to strengthen its anti-money laundering measures and combat the financing of terrorism, responding to FATF’s recommendations and addressing domestic concerns.