Financial Crime World

Here’s a rewritten version of the article in markdown format with proper headings, subheadings, and bullet points:

Japan’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Measures

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Japan has implemented various measures to prevent money laundering and the financing of terrorism. These measures are designed to detect and disrupt illicit financial activities that may be used to support organized crime, terrorist organizations, or other malicious actors.

In Japan, legal persons refer to organizations or entities that engage in specified non-profit activities (CESNAs), public interest corporations, social welfare corporations, medical corporations, incorporated educational institutions, and religious corporations.

  • Beneficial Ownership: Beneficial ownership refers to the natural person who ultimately owns or controls a legal person.
  • Identification of Beneficial Owners: In Japan, beneficial owners are identified as individuals who directly or indirectly hold more than one-fourth of the voting rights of a legal person.

Obligations on Financial Institutions and Other Specified Business Operators

Financial institutions (FIs) and other specified business operators in Japan are required to verify information about beneficial owners of corporate customers at the time of specified transactions with them.

  • Verification of Beneficial Owners: FIs and other specified business operators must verify the identity and beneficial ownership status of their corporate customers.
  • Reporting Requirements: These entities may be required to report suspicious transactions or activities to the Financial Intelligence Unit (FIU).

Notaries’ Verification of Beneficial Ownership

Notaries in Japan ask clients to report information on beneficial owners of legal persons and verify that the beneficial owner does not fall into the category of members of an organized crime group or international terrorists before certifying the articles of incorporation for founding legal persons.

  • Verification Process: Notaries must verify the identity and beneficial ownership status of the client and their affiliated individuals.
  • Reporting Requirements: Notaries may be required to report suspicious transactions or activities to the FIU.

Overview of the Beneficial Ownership List System

Under this system, upon request from a stock company, the registrar verifies the BO list (meaning a document that describes information on voting rights held by beneficial owners of the stock company) prepared by the stock company and issues a copy of the list.

  • Verification Process: The registrar must verify the accuracy of the BO list.
  • Reporting Requirements: The registrar may be required to report suspicious transactions or activities to the FIU.

Utilization of Financial Intelligence Unit (FIU)

Japan’s Financial Intelligence Unit, named Japan Financial Intelligence Center (JAFIC), collects, organizes, analyzes, and disseminates information reported by FIs, etc. to law enforcement agencies in order to support the government’s AML/CFT measures.

  • Reporting Requirements: FIs and other specified business operators may be required to report suspicious transactions or activities to JAFIC.
  • Analysis and Dissemination of Information: JAFIC analyzes and disseminates information to law enforcement agencies to support their investigations and prosecutions.

Enforcement and Asset Freezing

The Japanese government has implemented strict measures against money laundering/terrorist financing (ML/TF) through laws such as the Anti-Organized Crime Law (APOC), Anti-Drug Special Provisions Law, and other relevant laws.

  • Asset Freezing: The Japanese government may freeze assets suspected of being involved in ML/TF activities.
  • Prosecution and Punishment: Individuals or entities convicted of ML/TF offenses may face severe penalties, including imprisonment and fines.