Japan’s Anti-Money Laundering (AML) Measures: A Historical Perspective

Early Developments (1992-2000)

In 1992, Japan enacted the “Anti-Drug Special Provisions Law” to address money laundering related to drug crimes. This law established a suspicious transaction reporting system for financial institutions.

• Key Points:
  • The law was enacted in response to international pressure and domestic concerns about money laundering.
  • It marked the beginning of Japan’s AML efforts, setting the stage for future legislative changes.

Enactment of the Act on Punishment of Organized Crimes (2000)

Japan enacted this law based on FATF recommendations revised in 1996, which extended predicate offenses and added other serious crimes to the suspicious transaction reports regime. The Financial Supervisory Agency was designated as the Financial Intelligence Unit (FIU) of Japan.

• Key Points:
  • This law built upon the existing AML framework, introducing stricter regulations and a more comprehensive approach.
  • It demonstrated Japan’s commitment to international cooperation and its willingness to adapt to evolving global standards.

Enactment of Additional Laws (2002-2003)

“The Act on Punishment of Financing of Offences of Public Intimidation” was enacted in 2002 to address terrorist financing, and the “Customer Identification Act” was enacted in 2003. These laws required customer identification for financial institutions and introduced sanctions for unauthorized use of deposit accounts.

• Key Points:
  • These laws expanded Japan’s AML scope, addressing emerging threats such as terrorist financing.
  • They reinforced the importance of customer due diligence and compliance with regulations.

Enactment of the Act on Prevention of Transfer of Criminal Proceeds (2007)

Japan enacted this law based on revised FATF recommendations, which extended the scope of business operators required to implement customer identification. The National Police Agency was designated as the new FIU, and the law introduced a system for reporting suspicious transactions.

• Key Points:
  • This law updated Japan’s AML framework to align with international best practices.
  • It strengthened the country’s ability to detect and prevent money laundering activities.

Amendments to the Act on Prevention of Transfer of Criminal Proceeds (2011-2013)

A bill was submitted to the Diet in 2011 to address flaws pointed out by the Third FATF Mutual Evaluation. The amended law was enacted and promulgated in 2011, with full enforcement on April 1, 2013.

• Key Points:
  • These amendments reflected Japan’s commitment to continuous improvement and its willingness to address areas for growth.
  • They demonstrated the country’s dedication to maintaining a robust AML framework.