Japan’s Penalty for Financial Crimes: An Overview of Anti-Money Laundering Measures in the Land of the Rising Sun

Significance of AML/CFT Measures

Money laundering: concealment of the illicit origin of criminal proceeds
Global priority: response to drug abuse crises, organized crime, and terrorism threats
Japan’s commitment: criminalized money laundering under the Act on Punishment of Organized Crimes and the Anti-Drug Special Provisions Law

1988: United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances
1988: FATF established to set common standards for AML measures
1996: FATF expanded scope of predicate offenses, added terrorist financing measures in 2001

Early efforts: 1980s, Financial Intelligence Unit (FIU) at the Ministry of Finance, Prevention of transfer of Criminal Proceeds Ordinance, Bills and Notes Act
1990s: Anti-Drug Special Provisions Law, broadened scope of predicate offenses, established reporting system
2000: Act on Punishment of Organized Crimes, increased penalties, expanded scope of predicate offenses
2002, 2005: Focused on terrorist financing
2017: Enhanced regulatory framework for virtual currency exchanges and brokerages

1988-1989: Early efforts to combat money laundering
1989: Establishment of the FIU at the Ministry of Finance
1990s: Prevention of transfer of Criminal Proceeds Ordinance, Bills and Notes Act

Criticisms: narrow scope of predicate offenses, limitations in the legal framework for FIU information sharing

2016: FATF expressed concerns regarding the implementation of some recommendations and the application of a risk-based approach to money laundering and terrorist financing
Ongoing efforts: to address these concerns and strengthen Japan’s AML/CFT framework