Money Laundering Techniques in Japan Under Scrutiny as Country Urged to Improve Anti-Money Laundering Framework

Introduction

Japan’s efforts to combat money laundering and terrorist financing have yielded positive results, but authorities must prioritize certain areas to enhance the effectiveness of its anti-money laundering and counter-terrorist financing framework.

Assessment by Financial Action Task Force (FATF) and Asia-Pacific Group on Money Laundering

A recent assessment by the FATF and Asia-Pacific Group on Money Laundering found that Japan has a good understanding of the money laundering and terrorist financing risks it faces and has taken proactive measures in high-risk areas. Japanese authorities have demonstrated strong results in collecting and utilizing financial intelligence to investigate and prosecute money laundering and terrorist financing, as well as providing constructive cooperation with international counterparts.

Key Areas for Improvement

To further strengthen its anti-money laundering efforts, Japan needs to:

• Increase confiscation of criminal proceeds
• Ensure effective implementation of measures preventing the unwitting facilitation of sanctions evasion through proactive outreach to businesses about the risks of proliferation financing
• Improve requirements for financial and non-financial institutions to prevent money laundering and terrorist financing, including customer due diligence
• Improve access to beneficial ownership information to prevent misuse of legal persons and arrangements

Addressing Risks Linked to Virtual Assets

Japan has taken robust action to address risks linked to virtual assets and their service providers. However, measures must now be fully implemented to prevent their abuse.

Conclusion

The FATF adopted this report at its June 2021 plenary meeting, highlighting the importance of continued cooperation and improvement in Japan’s anti-money laundering efforts.