Financial Crime World

JAPAN’S CRACKDOWN ON FINANCIAL CRIME: UNDERSTANDING THE LAWS AND REGULATIONS AGAINST MONEY LAUNDERING

In 2022, financial institutions in Japan reported a record-high number of transactions suspected to be money laundering, with a total of 583,317 cases. This surge has prompted the government and regulatory bodies to strengthen measures against financial crime, making it essential for businesses and individuals to understand the laws and regulations surrounding money laundering.

WHAT IS MONEY LAUNDERING?

According to Japan’s National Police Agency, money laundering is defined as the act of disguising criminal proceeds so that their source and true ownership are obscured, in an effort to evade detection and apprehension by investigative authorities. This can involve various methods, including domestic exchange transactions, cash, bank deposit, credit card, and electronic money transactions.

IS MONEY LAUNDERING A CRIMINAL ACT?

Yes, money laundering is prohibited by law in Japan. Enforcement is carried out under laws such as the Act on Punishment of Organised Crimes and the Anti-Drug Special Provisions Law. Prevention measures are implemented under laws including the Act on Prevention of Transfer of Criminal Proceeds.

WHAT ARE THE PENALTIES FOR MONEY LAUNDERING?

In 2022, statutory penalties were increased to strengthen measures against money laundering. For example, the statutory penalty for the “crime of controlling business operations” was raised from imprisonment for up to 5 years or a fine of up to 10 million yen to imprisonment for up to 10 years or a fine of up to 100 million yen.

HOW DOES MONEY LAUNDERING WORK?

The money-laundering process involves three stages:

  • Placement: The stage where criminal proceeds are introduced into the financial system.
  • Layering: Moving the funds several times through repeated money transfers or other means to obscure the origins of the criminal proceeds.
  • Integration: Reintroducing the funds with obscured origins into economic activity in seemingly legitimate ways.

WHAT ARE SOME EXAMPLES OF MONEY LAUNDERING IN JAPAN?

Money laundering can take various forms, including domestic exchange transactions, cash, bank deposit, credit card, and electronic money transactions. In Japan, some notable cases of money laundering include:

  • Impersonating someone else to sell the rights to use electronic money obtained through sophisticated fraud schemes
  • Concealing assets by using a crypto address belonging to an unidentified person
  • Cross-border concealment of funds

WHAT HAPPENS IF CUSTOMER INFORMATION VERIFICATION REQUESTS FROM THE BANK ARE IGNORED?

To assist with crime prevention, the government is urging people to respond within the given deadline when they receive documents from financial institutions. If no response is received, the transaction may be halted or restricted.

The content in this article is for general information and education purposes only and should not be construed as legal or tax advice.