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Japan’s Anti-Money Laundering and Combating Financing of Terrorism Regulations Under Scrutiny

A recent report has assessed Japan’s efforts to combat money laundering and the financing of terrorism, highlighting areas where the country falls short in implementing international standards.

The Report: Evaluating Japan’s Compliance with FATF Recommendations

The report, which evaluates Japan’s compliance with the Financial Action Task Force (FATF) Recommendations, shows that while Japan has made progress in some areas, it still lags behind in others. The FATF is an intergovernmental organization that sets global standards for combating money laundering and terrorist financing.

Assessment Results: Compliant and Partially Compliant Ratings

Japan received ratings ranging from “compliant” to “partially compliant” across various aspects of its anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. The country was found to be:

  • Compliant in areas such as:
    • Assessing risk
    • Applying a risk-based approach
    • Requiring financial institutions to maintain accurate records
  • Partially Compliant in areas such as:
    • National cooperation and coordination
    • Confiscation and provisional measures
    • Targeted financial sanctions related to terrorism and terrorist financing
    • Laws on financial institution secrecy (non-compliant)

Areas for Improvement

The report highlighted several areas where Japan needs to improve its AML/CFT regulations, including:

  • Effective Customer Due Diligence: More effective measures are needed to ensure that financial institutions conduct thorough customer due diligence.
  • Regulation and Supervision of Financial Institutions: Better regulation and supervision of financial institutions is necessary to ensure compliance with AML/CFT regulations.
  • Transparency in Beneficial Ownership: Greater transparency is required in beneficial ownership to prevent the misuse of shell companies.

Japan’s Commitment to Improvement

Japan’s authorities have pledged to address these shortcomings and improve their AML/CFT regime. The country has already taken steps to strengthen its anti-money laundering laws and regulations, and has committed to implementing additional measures to combat the financing of terrorism.

Full Report Available on FATF Website

The full report can be accessed on the FATF website.