Financial Crime World

Japan’s Battle Against Money Laundering and Financial Crimes: An Overview

Background

Japan’s economy, the third-largest in the world, is known for its robustness and stability. However, beneath the surface, financial crimes, including money laundering, have persisted, posing a significant challenge for authorities.

Governments’ Response

Financial Services Agency (FSA) and the Financial Intelligence Unit (FIU)

The Japanese government has taken substantial steps to combat these illicit activities through enhanced regulations and policies. The FSA and the FIU have been at the forefront of this fight.

  • Revised Fundamental Law for Prevention of Particular and Serious Crimes
    • Allows FSA to issue penalties for AML non-compliance
    • Ability to temporarily suspend, restrict, or revoke financial institutions’ licenses

Japan’s FIU has signed MLAs with numerous countries to facilitate information-sharing and cooperation on financial investigations:

  • United States
  • China
  • India
  • United Kingdom
  • Others

Revised Act on Prevention of Transfer of Criminal Proceeds

Enacted in January 2020, this law requires reporting of transactions suspected of involving criminal proceeds:

  • Businesses, such as lawyers, accountants, real estate agents, and casinos
  • Includes transactions related to virtual currencies

International Collaboration

  • FSA’s participation in FATF
    • Recognized Japan as having strengthened its AML/CFT regime (October 2021)
  • Commitment to addressing financial crimes

Challenges and Future Steps

  • Aging population and a large informal economy
  • Financial system’s reliance on trust and relationships
  • Adhering to global AML standards
  • Technological advancements

By strengthening its regulatory framework, bolstering international cooperation, and embracing technological advancements, Japan can continue to effectively combat financial crimes and maintain the integrity of its financial system.