Terrorist Financing Prevention Strategies in Japan Fall Short in Key Areas, Says International Report
The Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering have conducted a comprehensive review of Japan’s measures to combat money laundering and terrorist financing. While Japan’s efforts are delivering results, there are still key areas that need improvement.
Understanding Risks, but Room for Improvement
Japan has a good understanding of the money laundering and terrorist financing risks it faces. However, the country needs to focus more on the laundering of proceeds in complex large-scale cases often involving fraud and drug-related crimes. This includes addressing key risk areas such as organized crime groups like the Boryokudan.
Law Enforcement Efforts
Law enforcement agencies in Japan need to increase efforts in the confiscation of criminal proceeds. This will help to deprive criminals of their ill-gotten gains and disrupt their ability to fund further illegal activities.
Preventing Unwitting Facilitation of Sanctions Evasion
Japanese authorities must ensure the effective implementation of measures that prevent the unwitting facilitation of sanctions evasion through proactive outreach to businesses about the risks of proliferation financing. This will help to prevent Japan-based companies from inadvertently supporting illegal activities such as nuclear or weapons proliferation.
Virtual Assets and Their Service Providers
Japan has taken robust action to address risks linked to virtual assets and their service providers. However, now it needs to fully implement measures to prevent their abuse. This includes ensuring that these entities are subject to the same regulatory standards as traditional financial institutions.
Improved Requirements for Prevention of Money Laundering and Terrorist Financing
Financial and non-financial institutions in Japan must improve requirements for preventing money laundering and terrorist financing. This includes:
- Conducting customer due diligence
- Accessing beneficial ownership information
- Preventing the misuse of legal persons and arrangements
Comprehensive Approach Necessary
The report, adopted by FATF at its June 2021 plenary meeting, highlights areas where Japan needs to strengthen its efforts to prevent terrorist financing and money laundering. A comprehensive approach is necessary to effectively combat these threats.
By addressing these key areas, Japan can improve the effectiveness of its anti-money laundering and counter-terrorist financing framework, ultimately helping to protect its financial system from abuse by criminals and terrorists.