Financial Crime World

Japan Grapples with Bank Secrecy and Financial Crime: Money Laundering Cases Soar

A Record High of Suspected Transactions

Tokyo, Japan - In 2022, Japan’s financial institutions reported a staggering 583,317 transactions suspected of money laundering, a significant increase of 53,167 from the previous year. This surge in cases has raised concerns about the involvement of legitimate businesses and individuals in financial crimes.

Understanding Money Laundering

According to Japan’s National Police Agency, money laundering is defined as the act of disguising criminal proceeds to evade detection by law enforcement agencies. The crime can be committed through various methods, including:

  • Cash transactions
  • Bank deposits
  • Credit card transactions
  • Electronic money transfers

Consequences and Penalties

In Japan, money laundering is prohibited by law, with penalties ranging from fines to imprisonment. In 2022, statutory penalties were increased as part of efforts to strengthen measures against the crime. For example:

  • The statutory penalty for controlling business operations using criminal proceeds was raised from up to 5 years’ imprisonment or a fine of up to ¥10 million to up to 10 years’ imprisonment or a fine of up to ¥10 million.

Stages of Money Laundering

Money laundering typically involves three stages:

  • Placement: Introducing criminal proceeds into the financial system
  • Layering: Moving the funds several times to obscure their origin
  • Integration: Reintroducing the funds into economic activity through seemingly legitimate means

Recent Cases in Japan

Recent cases have highlighted the complexity of money laundering schemes, including:

  • A group of males impersonating someone else to sell electronic money obtained through sophisticated fraud schemes
  • A company employee concealing assets by transferring them to a crypto address managed by an unidentified individual

Government Measures to Prevent Money Laundering

The Japanese government has strengthened measures to prevent money laundering, including:

  • Verification of transaction details and customer identity by financial institutions
  • Financial institutions sending users documents, such as:
    • Confirmation of purpose of transaction
    • Customer information
    • Delivery details
  • The government urges people to respond promptly to these requests, as failure to do so may result in the financial institution refusing to fulfill its obligations related to a transaction or even halting or restricting the transaction.