Japan Steps Up Efforts to Combat Money Laundering and Terrorism Financing

Tokyo, Japan - In a bid to strengthen its fight against money laundering (ML) and terrorism financing (TF), the Japanese government has announced a series of measures aimed at enhancing its regulatory framework, improving information sharing, and increasing the effectiveness of investigations and prosecutions.

Enhancing Regulatory Framework

The measures outlined in a new report by the Ministry of Justice (MOJ), National Police Agency (NPA), and other relevant authorities include requiring all financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs) to verify beneficial ownership information (BOI) for existing customers within a prescriptive deadline.

By spring 2024, the government plans to operationalize a new system of commercial registries for BOI, promote its use through interagency coordination, and establish a mechanism to manage BOI in a centralized manner. The aim is to improve access and accuracy of BOI relating to civil trusts and foreign trusts, particularly those not created or administered by trust companies.

Strengthening Investigations and Prosecutions

The report also highlights the need to develop guidance for law enforcement agencies on timely access to BOI for legal persons and trusts. Additionally, DNFBPs will be required to implement customer due diligence (CDD) obligations, including verification of BOI, and take necessary measures as appropriate.

Key Outcomes

Increasing the statutory sentence for ML offenses
Enhancing ML investigation and prosecution
Strengthening asset tracing investigations, confiscation, and collection of equivalent value
Empowering Customs to restrain cash and bearer negotiable instruments at the border
Increasing the statutory sentence for TF offenses
Enhancing TF investigation and prosecution

Enhanced Response by Customs

The government has also announced plans to enhance the response by customs, increase the statutory sentence for proliferation-related offenses, and conduct risk assessments and monitoring of non-profit organizations (NPOs) sectors.

Strengthening International Cooperation

These measures are part of Japan’s ongoing efforts to combat ML/TF and prevent the misuse of NPO sectors. The report highlights the importance of strengthening international cooperation and information sharing with other countries to effectively address these threats.

Timeline for Implementation

The government has set a timeline for implementing these measures, with several outcomes expected by autumn 2022, including:

Clarification of asset freezing measures under the Foreign Exchange and Foreign Trade Act
Streamlining administrative procedures for asset freezing measures
Enhancing implementation of asset freezing measures by FIs and DNFBPs
Risk assessment and monitoring of NPO sectors

The full report can be found on the MOJ website.