Financial Crime World

Financial Crime Investigation Procedures in Japan: Tougher Penalties and Expanded Scope of Predicate Offenses

Introduction

Japan has strengthened its anti-money laundering (AML) measures to comply with recommendations from the Financial Action Task Force (FATF). This has led to significant changes in financial crime investigation procedures, improving the detection and prosecution of money laundering activities.

Broadened Scope of Predicate Offenses

The scope of predicate offenses has been expanded to include a broader range of crimes, including:

  • Tax evasion
  • Price cartels
  • Organized crimes

This change aims to strengthen Japan’s ability to combat organized crime and money laundering activities.

Amended Statutory Penalties

In response to FATF recommendations, Japan has amended its statutory penalties for money laundering. The new penalties include:

  • Imprisonment for up to 10 years
  • Fine of up to ¥5 million
  • Both imprisonment and fine
  • Imprisonment for up to seven years
  • Fine of up to ¥3 million
  • Both imprisonment and fine

Managing an Enterprise by the Use of Criminal Proceeds

  • Imprisonment for up to 10 years
  • Fine of up to ¥10 million
  • Both imprisonment and fine

Asset Freezing and Forfeiture

To ensure the forfeiture of crime proceeds, Japanese courts may:

  • Issue protective orders that prohibit the disposing of assets before prosecution
  • Order the collection of an equivalent value of consumed or transferred crime proceeds
  • Forfeit cryptoassets as crime proceeds

Victim Compensation

Japanese courts may not order the forfeiture of a crime victim’s property if it would cause an obstruction to damages claimed by victims. However, the court may forfeit such property if it is difficult for the victim to recover damages through other means.

Limitation Periods

The limitation period governing money laundering prosecutions in Japan varies according to the maximum sentence of money laundering activities:

  • Three years
  • Five years
  • Seven years

Extraterritorial Reach

Japanese AML laws apply to:

  • Non-citizens and non-residents involved in money laundering activities within the jurisdiction’s borders
  • Money laundering activities committed by Japanese nationals outside Japan’s borders