Japan Tightens the Screws on Financial Crimes: A Closer Look at AML/CFT Regulations by Country
Japan has taken a significant step to maintain financial integrity and meet international obligations by strengthening its anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. This article provides an overview of Japan’s robust legislation and enforcement mechanisms, making it a model for other nations.
Act on Prevention of Transfer of Criminal Proceeds (APTCP)
The APTCP, enacted in 2007 and revised in 2016, is the foundation of Japan’s AML efforts. This law requires specified business operators to conduct customer due diligence (CDD) when establishing relationships or conducting transactions that exceed a certain threshold.
Customer Due Diligence
- Verify the identity of customers
- Monitor activities for suspicious behavior
- Verify the source of funds
- Ensure accuracy of customer information
- Report any unusual transactions to authorities
Record Keeping
Businesses are obligated to maintain transaction records for at least seven years, providing a paper trail that can aid in investigations and prosecutions.
Suspicious Transaction Reporting
- Report suspicious transactions to the Japanese Financial Intelligence Centre (JAFIC) if suspected money laundering or terrorist financing
- Critical step in tracking and disrupting illegal activities
Other Key Legislation
- Financial Instruments and Exchange Act (FIEA): Focuses on securities companies and financial instruments
- Foreign Exchange and Foreign Trade Act (FEFTA): Regulates cross-border transactions exceeding 100,000 yen
- Act on Prevention of Terrorism Financing: Criminalizes terrorist financing and imposes severe penalties for those found guilty
International Cooperation
Japan recognizes the importance of international cooperation in combating financial crimes. The country has established mechanisms to share information with foreign governments and international organizations, facilitating global efforts to track and disrupt illegal activities.
In conclusion, Japan’s AML/CFT regulations demonstrate a commitment to maintaining financial integrity and preventing illicit activities. By understanding these regulations, financial institutions and individuals can better navigate the complex landscape of anti-money laundering and combating the financing of terrorism measures in Japan.