Financial Crime World

Japan’s Anti-Money Laundering Measures: A Step-by-Step Development

Introduction

Japan has been developing its anti-money laundering (AML) measures in accordance with international initiatives. The country’s laws and regulations have evolved over time to address various aspects of money laundering, including suspicious transaction reporting, predicate offenses, and customer identification.

Early Developments (1992-2000)

  • In 1992, Japan enacted the Law concerning Special Provisions for the Narcotics and Psychotropics Control Law etc. and Other Matters for the Prevention of Activities Encouraging Illicit Conduct and Other Activities Involving Controlled Substances through International Cooperation, also known as the Anti-Drug Special Provisions Law.
  • This law established the suspicious transaction reporting system by financial institutions etc. in response to the FATF 40 Recommendations.

Expansion of Predicate Offenses (2000)

  • The Act on Punishment of Organized Crimes and Control of Crime Proceeds was enacted in February 2000, extending the scope of predicate offenses for money laundering and designating the Financial Supervisory Agency as the FIU.
  • This move addressed a negative view pointed out by the FATF mutual evaluation of Japan in 1994.

Response to Terrorist Financing (2002-2003)

  • The terrorist attacks in the US led to the enactment of the Act on Punishment of Financing of Offences of Public Intimidation in July 2002, which included terrorist financing offense into predicate offenses.
  • The Law on Customer Identification by Financial Institutions etc. was also enacted in January 2003 to implement the customer identification regime required under the International Convention for the Suppression of the Financing of Terrorism.

Implementation of Revised Recommendations (2004-2008)

  • The FATF revised the 40 Recommendations again in 2003 to extend the scope of business operators required to implement customer identification etc. to business operators other than financial institutions.
  • The Headquarters for Promotion of Measures Against Transnational Organized Crime and International Terrorism publicized an Action Plan for Prevention of Terrorism in December 2004, which included the implementation of the re-revised Recommendations.
  • The National Police Agency drafted a bill to implement the re-revised Recommendations and submitted it to the 166th National Diet session in February 2007.

Further Amendments (2011-2013)

  • A bill on amendments to the Act on Prevention of Transfer of Criminal Proceeds was submitted to the 177th session of the Diet in April 2011, which was enacted on the 27th of the same month.
  • The law for the amendment of the Act on Prevention of Transfer of Criminal Proceeds was promulgated on the following 28th and fully enforced on 1st April 2013.