Financial Crime World

Japan’s Unyielding Front Against Money Laundering: A Look Back at Four and a Half Years of AML Policymaking

Insights from the FSA’s Hiroshi Ozaki and Daisuke Mamba

The Financial Services Agency (FSA) of Japan, a leading regulatory body, has shown an unwavering commitment to fighting money laundering (AML) and terrorist financing (CTF) in the country. In an exclusive interview, Hiroshi Ozaki and Daisuke Mamba, from the FSA, reflect on the last four and a half years of progress in this critical mission.

Robust AML/CTF Policies

Since 2017, the FSA has led the way in implementing robust AML/CTF policies. They have taken an aggressive approach, introducing new regulations, enhancing existing frameworks, and increasing collaboration with domestic and international partners.

Early Achievements

In the early years, the FSA made several significant strides. These include:

  • Enforcing stricter CDD requirements: The regulatory body introduced stricter customer due diligence (CDD) requirements to strengthen the identification and verification process.
  • Boosting on-site inspections: The FSA stepped up its on-site inspections to ensure financial institutions were adhering to AML/CTF regulations.
  • Launching a Financial Intelligence Unit (FIU): They established an FIU to facilitate information sharing among financial institutions and law enforcement agencies.

Industry Engagement

The FSA has also been proactive in engaging with industry players. They have:

  • Conducting extensive training programs: The regulatory body recognized the importance of educating financial institutions on their roles and responsibilities.
  • Fostering a culture of AML/CTF awareness: The FSA fostered a culture of AML/CTF awareness, stressing the importance of every financial institution in preventing financial crimes.

Challenges

Despite these achievements, the FSA faced challenges. One major hurdle was dealing with perceived misinterpretations of the regulations. Clearer communication and education were essential to keep financial institutions fully compliant.

Recent Accomplishments

Despite challenges, the FSA continued its efforts, recently introducing:

  • Guidelines for virtual assets and digital currencies: The FSA set guidelines to address AML/CTF issues in the evolving virtual assets and digital currencies market.
  • Establishing a Fintech Centre: The regulatory body established a Fintech Centre to facilitate innovation while maintaining regulatory integrity.

Future Plans

The FSA looks forward to enhancing collaborative efforts with regulatory bodies and financial institutions:

  • Strengthening defenses against financial crimes: By pooling resources and knowledge, they aim to strengthen Japan’s defenses against financial crimes.
  • Exploring technological innovations: The FSA plans to investigate technological innovations, such as machine learning and artificial intelligence, to improve risk assessment capabilities.

Conclusion

Japan’s position as a key player in the global financial landscape underscores the importance of the FSA’s unwavering stance against money laundering and terrorist financing. By upholding the integrity of the financial sector and protecting its citizens, the FSA sets a strong precedent for other regulatory bodies to follow.