Financial Crime World

A Brief History of Anti-Money Laundering (AML) Measures in Japan

Introduction

Japan has made significant strides in implementing anti-money laundering (AML) measures over the past two decades. This article provides an overview of the key milestones and developments in Japan’s AML framework.

Early Introduction of AML Measures (1999)

  • The Act on Punishment of Organized Crimes was introduced, covering predicate offences for money laundering.
  • This marked the beginning of Japan’s efforts to combat financial crime and money laundering.

Key Features:

  • Predicate offences were initially limited to illegal drug crimes
  • Law enforcement agencies began to take a more active role in monitoring financial transactions

Expansion of AML Measures (2000)

  • The scope of predicate offences was expanded to include other serious crimes
  • The suspicious transaction reports regime was extended to cover more crimes
  • Financial institutions were required to report suspicious transactions to the authorities

Key Features:

  • Expansion of predicate offences to include:
    • Corruption and bribery
    • Tax evasion and fraud
    • Other serious economic crimes
  • Increased reporting requirements for financial institutions

Enhanced AML Measures (2002-2003)

  • The Act on Punishment of Financing of Offences of Public Intimidation was enacted to combat terrorist financing
  • Customer identification requirements were implemented for financial institutions
  • International cooperation and information sharing improved

Key Features:

  • New law to combat terrorist financing
  • Enhanced customer due diligence requirements for financial institutions
  • Improved international cooperation and information sharing

Implementation of Revised FATF Recommendations (2007)

  • The Act on Prevention of Transfer of Criminal Proceeds was introduced to implement the re-revised FATF Recommendations
  • Business operators were required to implement customer identification and other AML measures

Key Features:

  • Expansion of business operators required to implement AML measures
  • Strengthened customer due diligence requirements
  • Enhanced reporting requirements for suspicious transactions

Amendments to AML Law (2011-2013)

  • The law was amended to address flaws identified by the Third FATF Mutual Evaluation
  • Ongoing issues such as Furikome Fraud were addressed

Key Features:

  • Amendments to strengthen AML measures and prevent money laundering
  • Enhanced enforcement powers for authorities
  • Improved international cooperation and information sharing