Financial Crime World

Japan’s Shift to Tackle Financial Crimes: An Overview of Anti-Money Laundering Measures

Money laundering and terrorist financing are covert, elusive, and transnational crimes that pose a substantial threat to global security. In response to these malicious practices, Japan has made significant strides to update its regulatory framework and keep pace with international standards. This article provides an overview of Japan’s anti-money laundering (AML) and counter-terrorist financing (CTF) measures.

The international emphasis on AML/CTF measures

  1. Definition and global threat
    • Money laundering: concealing the illicit origin of criminal proceeds
    • Terrorist financing: solicitation, collection, or provision of funds to support terrorist acts or organizations
  2. Evolution of international efforts
    • UN New Narcotics Convention (1988)
    • The Financial Action Task Force (FATF) and The 40 Recommendations (1990)

The evolution of AML/CTF measures on the international stage

The 1980s marked a critical turning point in response to the global spread of drug abuse and the need to inflict damage on the sources of funds by preventing money laundering activities. In the following decades, the focus expanded to counteract international organized crimes and terrorism and standardize measures globally. The FATF:

  • Updated The 40 Recommendations in the 1990s
  • Created Financial Intelligence Units (FIUs) in 1996 and 1998
  • Issued “The 8 Special Recommendations” in 2001
  • Incorporated “The 9th Special Recommendation” in 2004

The AML/CTF regime in Japan

  1. Domestic law and international treaties
    • Anti-Drug Special Provisions Law (1992)
    • Act on Punishment of Organized Crimes (2000)
  2. Expansion of predicate offenses and scope of crimes
    • Illegal drug crimes
    • Narcotics control law offenses
    • Other crimes under the Act on Punishment of Organized Crimes
  3. Establishment of Japan’s FIU - The Financial Services Agency

Adapting to changing money laundering tactics

  1. Expansion to non-financial sectors
    • Requirements for operators to comply with anti-money laundering measures
  2. Emerging threats and countermeasures
    • Weapons of mass destruction
    • Corruption
  3. FATF’s revision of Recommendations (2012)

Conclusion

Japan’s AML/CTF measures are designed to keep pace with international initiatives and adapt to the ever-evolving nature of money laundering and terrorist financing. With ongoing efforts to strengthen the regulatory framework and stay up-to-date on global standards, Japan remains committed to effectively countering these threats.