Financial Crime World

Japan Urged to Boost Efforts in Anti-Money Laundering and Terrorist Financing Regulations

Comprehensive Review Reveals Areas for Improvement

A recent review of Japan’s anti-money laundering (AML) and counter terrorist financing (CFT) framework has found that while the country is delivering good results in some areas, it needs to prioritize efforts in others to improve its overall effectiveness. The assessment was conducted by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering.

Key Findings

  • Japanese authorities have a good understanding of the risks they face and have been proactive in addressing them, particularly in areas that pose major threats.
  • Progress has been made in collecting and using financial intelligence to investigate and prosecute money laundering and terrorist financing cases, as well as cooperating with international counterparts.

Areas for Improvement

  • Law enforcement agencies need to focus more on the laundering of proceeds from complex, large-scale crimes involving fraud and drug-related offenses, including addressing the key risk posed by organized crime groups such as the Boryokudan.
  • Authorities must increase efforts to confiscate criminal assets.
  • Japan needs to enhance its measures to prevent the unwitting facilitation of sanctions evasion and ensure effective implementation of measures to prevent the abuse of virtual assets and their service providers.
  • Japanese financial institutions require improved requirements for customer due diligence and access to beneficial ownership information to prevent the misuse of legal persons and arrangements.

Call to Action

The FATF adopted the report at its June 2021 plenary meeting, urging Japan to address these areas of improvement. While Japan has made significant progress in combating money laundering and terrorist financing, this assessment serves as a reminder that ongoing efforts are necessary to ensure the effectiveness of its AML/CFT framework.

Conclusion

The review highlights the need for Japan to continue strengthening its AML/CFT regime to prevent and detect money laundering and terrorist financing. By addressing these areas of improvement, Japan can enhance its global reputation as a leader in combating financial crimes.