Japan Upgraded to Largely Compliant on AML/CFT

Tokyo, Japan - In a significant milestone for Japan’s efforts to combat money laundering and terrorist financing (AML/CFT), the Financial Action Task Force (FATF) has upgraded the country’s technical compliance rating from Partially Compliant (PC) to Largely Compliant (LC).

Background

The upgrade comes after Japan made significant progress in addressing deficiencies identified in its Mutual Evaluation Report (MER) published in June 2021. The MER was conducted by Mr. Michele Antonio Bozza Venturi, AML/CFT Financial Advisor at the Bank of Italy.

Key Developments

• Japan has established an Inter-Ministerial Council for AML/CFT & CPF Policy and issued a new National AML/CFT/CPF Action Plan.
  • The plan addresses several deficiencies related to its national cooperation and coordination framework, including strengthening enforcement of asset freezing measures and legislative reforms.
• The council has adopted a draft national policy on AML/CFT, informed by risks identified in a recent Risk Assessment Report (NRA).
• Japan has established a task force to promote the strengthening of terrorist financing investigation and prosecution, enhanced risk understanding among obliged entities, and improved implementation of asset freezing measures.

Progress

While some minor gaps remain, including unclear responsibilities for data protection, Japan’s progress has been deemed sufficient to warrant an upgrade from PC to LC on Recommendation 2. The recommendation assesses whether countries have clear responsibility for defining AML/CFT policies informed by risks and regularly reviewing them.

Technical Compliance Rating Table

Source

FATF, Mutual Evaluation Report - Japan 2021, June 2021.

Note: The FATF will continue to monitor Japan’s progress in implementing its AML/CFT measures, with the country remaining in enhanced follow-up.