Financial Crime World

Japan’s AML/CFT Framework Shows Progress, But Areas for Improvement Remain: Report

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A comprehensive review of Japan’s anti-money laundering (AML) and counter-terrorist financing (CFT) measures has revealed that while significant progress has been made, there are still areas where improvement is needed. The Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering assessed Japan’s AML/CFT system in a recent report.

Significant Progress Made

According to the Mutual Evaluation Report, Japan has made strides in combating money laundering and terrorist financing. Authorities have demonstrated a good understanding of the risks they face, and the country has been at the forefront of AML/CFT measures in areas that present major risks for the nation.

  • Combating money laundering and terrorist financing
  • Understanding the risks faced by authorities

Areas for Improvement

However, the report highlights several key areas where improvement is needed:

Law Enforcement Agencies

Law enforcement agencies are urged to focus more on the laundering of proceeds in complex large-scale cases often involving fraud and drug-related crimes, including addressing the significant risk posed by organized crime groups such as “the Boryokudan”.

  • Focus on complex large-scale cases
  • Addressing the risk posed by organized crime groups

Confiscation of Criminal Proceeds

Authorities need to increase efforts in confiscating criminal proceeds.

  • Increase efforts in confiscating criminal proceeds

Virtual Assets and Service Providers

The country is urged to fully implement measures to prevent the abuse of virtual assets and their service providers.

  • Fully implement measures to prevent abuse
  • Ensure effective implementation of measures

Customer Due Diligence and Access to Beneficial Ownership Information

Japanese authorities are tasked with improving requirements for financial and non-financial institutions to prevent money laundering and terrorist financing, including customer due diligence and access to beneficial ownership information.

  • Improve requirements for financial and non-financial institutions
  • Ensure effective implementation of measures

Roadmap for Improvement

The FATF adopted the report at its June 2021 plenary meeting, providing a roadmap for Japan’s AML/CFT framework moving forward. The report will serve as a guide for Japanese authorities to address the identified areas for improvement.

By implementing the recommendations outlined in the report, Japan can further strengthen its AML/CFT framework and ensure that it remains effective in combating money laundering and terrorist financing.