Financial Crime World

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Japan’s Anti-Money Laundering (AML) Measures

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Early Developments

Japan has a history of enforcing anti-money laundering measures, starting with laws related to drug crimes. Here are some key developments:

  • 1992: 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 (Anti-Drug Special Provisions Law): This law established a suspicious transaction reporting system by financial institutions, but only targeted illegal drug crimes.
  • 1992: Suspicious Transaction Reporting System: The Anti-Drug Special Provisions Law introduced a system where financial institutions were required to report suspicious transactions related to illegal drug crimes.

Act on Punishment of Organized Crimes

In 2000, Japan enacted the Act on Punishment of Organized Crimes and Control of Crime Proceeds, which extended the scope of predicate offenses for money laundering to include other serious crimes besides illegal drug crimes. The law also designated the Financial Supervisory Agency (later the Financial Services Agency) as the Financial Intelligence Unit (FIU).

Enactment of New Laws

Act on Punishment of Financing of Offences of Public Intimidation

In 2002, Japan enacted the Act on Punishment of Financing of Offences of Public Intimidation to implement the International Convention for the Suppression of the Financing of Terrorism.

Law on Customer Identification by Financial Institutions etc.

In 2003, Japan enforced the Law on Customer Identification by Financial Institutions etc. (later amended and renamed as the Customer Identification Act in 2004) to implement customer identification measures required under international conventions and FATF Recommendations.

Act on Prevention of Transfer of Criminal Proceeds

Enactment

In 2007, Japan enacted the Act on Prevention of Transfer of Criminal Proceeds to extend the scope of business operators required to implement customer identification and other AML measures. The law also transferred the FIU from the Financial Services Agency to the National Police Agency.

Amendments

  • 2011: Amendments: Japan enacted amendments to the Act on Prevention of Transfer of Criminal Proceeds to address flaws pointed out by the Third FATF Mutual Evaluation.
  • 2013: Full Enforcement: The amendments were fully enforced in 2013.

Conclusion

Japan has developed its AML measures step-by-step, starting with laws related to drug crimes and later extending to other serious crimes and international conventions. The country’s efforts have been guided by international cooperation and recommendations from organizations such as the FATF.