Financial Crime World

Public Intimidation: Japan’s Efforts to Combat Terrorist Financing

======================================================

In an effort to prevent terrorist activities, Japan has implemented various laws and regulations to combat the financing of terrorism (CFT) and money laundering (ML). The country is committed to preventing the misuse of its financial system for terrorist purposes.

Punishment for Terrorist Funds

The Act on Prevention of Transfer of Criminal Proceeds (APTCP) provides for punishment for the collection and provision of terrorist funds. This law aims to prevent the transfer of criminal proceeds, including those derived from terrorist activities, and to disrupt the financial networks used by terrorists.

Key Provisions:

  • Punishes individuals and organizations that collect or provide terrorist funds
  • Regulates the transfer of criminal proceeds, including those derived from terrorist activities

Terrorist Asset Freezing Act

Japan has also implemented the Terrorist Asset Freezing Act (TAFA), which regulates domestic transactions by international terrorists and others who are subject to asset freezing measures under United Nations Security Council resolutions. The TAFA requires banks and other financial institutions to verify the legality of their transactions with customers and secures the effectiveness of asset freezing measures.

Key Provisions:

  • Regulates domestic transactions by international terrorists
  • Requires financial institutions to verify the legality of transactions
  • Secures the effectiveness of asset freezing measures

Risk-Based Approach

To prevent ML/TF, Japan has adopted a risk-based approach, which involves assessing the risks associated with various types of transactions and businesses. The National Public Safety Commission prepares and publishes the National Risk Assessment-Follow-up Report (NRA-FUR), which identifies high-risk areas and specifies measures to mitigate these risks.

Key Points:

  • Risk assessment is conducted to identify high-risk areas
  • Measures are implemented to mitigate these risks
  • Reporting requirements for financial institutions

Financial Institutions

Financial institutions (FIs) play a crucial role in combating ML/TF, as they are vulnerable to misuse by criminal organizations. FIs must take various risk reduction measures, including customer due diligence and the reporting of suspicious transactions. Authorities supervise FIs to ensure compliance with anti-money laundering and CFT regulations.

Key Responsibilities:

  • Conduct customer due diligence
  • Report suspicious transactions
  • Implement internal controls

Designated Non-Financial Businesses and Professions

Designated non-financial businesses and professions (DNFBPs) are also subject to AML/CFT regulations. These businesses include real estate brokers, dealers in precious metals and stones, and lawyers, among others. DNFBPs must implement internal controls and report suspicious transactions to the authorities.

Key Responsibilities:

  • Implement internal controls
  • Report suspicious transactions

Utilization of Financial Intelligence Unit

Japan’s Financial Intelligence Unit (FIU), known as the Japan Financial Intelligence Center (JAFIC), plays a crucial role in combating ML/TF by analyzing suspicious transaction reports and disseminating analysis results to law enforcement agencies. JAFIC has signed agreements with FIUs in over 100 foreign countries to exchange information on AML/CFT measures.

Key Functions:

  • Analyze suspicious transaction reports
  • Disseminate analysis results to law enforcement agencies
  • Exchange information with foreign FIUs

Enforcement and Asset Freezing

Japan’s laws and regulations provide for strict measures against ML/TF, including investigation, prosecution, and asset freezing. The country has implemented asset freezing measures to prevent funds and other assets from being used for and flowing to terrorist organizations and individuals designated by the United Nations Security Council.

Key Measures:

  • Investigation and prosecution of ML/TF cases
  • Asset freezing measures to prevent funds from being used by terrorists

In conclusion, Japan is committed to combating ML/TF and preventing its financial system from being misused by criminal organizations. Through various laws and regulations, risk-based approach, and utilization of FIU, Japan aims to ensure the safety and security of its citizens and prevent terrorist activities.