Financial Crime World

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Japan’s War on Drug-Related Crime Proceeds: A Comprehensive Approach

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In a bid to combat the scourge of drug-related crime, Japan has enacted various laws aimed at confiscating or forfeiting the proceeds of such crimes.

Key Legislation

  • The Act on Punishment of Financing of Offences (TF Act) criminalizes the provision and collection of funds for terrorist activities.
  • The Terrorist Asset Freezing Act (TAFA) regulates domestic transactions involving international terrorists not covered by the Foreign Exchange and Foreign Trade Act (FEFTA).

Risk-Based Approach

To prevent the misuse of financial institutions, Japan has implemented a risk-based approach under the Act on Prevention of Transfer of Criminal Proceeds (APTCP). The National Public Safety Commission publishes an annual report assessing money laundering (ML) and terrorist financing (TF) risks for each category of transactions by specified business operators.

Financial Institutions

  • Japan’s financial institutions (FIs), including banks, insurance companies, and other financial service providers, are required to take various risk reduction measures to prevent their services from being used for illegal activities.
    • Customer due diligence
    • Reporting of suspicious transactions

Designated Non-Financial Businesses and Professions

  • In addition to FIs, Japan has designated certain non-financial businesses and professions (DNFBPs), such as real estate brokers and dealers in precious metals and stones, as specified business operators subject to similar risk reduction measures.

Beneficial Ownership Verification

To prevent the use of corporate entities for illegal activities, Japan requires:

  • Notaries to verify beneficial ownership information at the time of legal person incorporation.
  • FIs to verify beneficial ownership information at the time of specified transactions with corporate customers.

Financial Intelligence Unit

The Japan Financial Intelligence Center (JAFIC) serves as a national center for:

  • Receiving and analyzing suspicious transaction reports
  • Disseminating analysis results to law enforcement agencies
  • Supporting the government’s anti-money laundering and counter-terrorism financing measures

Enforcement and Asset Freezing

To ensure the thorough deprivation of crime proceeds, including those related to drug crime, Japan has implemented strict laws and regulations aimed at:

  • Investigating, prosecuting, and punishing money laundering and terrorist financing.
  • Freezing assets of terrorists and their supporters in response to United Nations Security Council resolutions.

By combining these measures, Japan is demonstrating its commitment to combating the proliferation of drug-related crime proceeds and preventing their use for illegal activities.