Financial Crime World

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Money Laundering Definition in Japan: A Comprehensive Guide

In Japan, money laundering is considered a serious crime that involves concealing or disguising the source of illegally obtained funds to disguise their criminal origin. The country has strict laws and regulations in place to prevent and combat money laundering activities.

Enforcement Agencies

The police departments of each prefecture and public prosecutor’s offices are responsible for enforcing Japan’s anti-money laundering (AML) laws. There is no special government entity that specifically enforces AML laws, but the authorities work together to identify and prosecute money laundering cases.

Who Can Be Prosecuted?

Both natural and legal persons can be prosecuted for money laundering in Japan. This includes:

  • Individuals
  • Corporations
  • Other organizations involved in illegal activities such as drug trafficking or organized crime

What Constitutes Money Laundering?

Money laundering is defined as concealing or disguising the source of illegally obtained funds to disguise their criminal origin. The Anti-Drug Special Provisions Act and the Act on Punishment of Organised Crimes both criminalize money laundering activities, including:

  • Concealing drug crime proceeds
  • Managing an enterprise by the use of criminal proceeds
  • Receiving crime proceeds

Limitations on Assets and Transactions

There is no limitation on the types of assets or transactions that can form the basis of a money laundering offence. This means that any illegal activity involving the concealment or disguise of illegally obtained funds can be prosecuted as money laundering.

Predicate Offences

Predicate offences are listed in article 2, paragraph 2 of the Anti-Drug Special Provisions Act and article 2, paragraph 2 of the Act on Punishment of Organised Crimes. These include a wide range of crimes such as:

  • Drug trafficking
  • Organized crime
  • Tax evasion
  • Price cartels

Defences

There is no special codified or common law defence to charges of money laundering in Japan. The prosecution must prove that the defendant intended to conceal or disguise illegally obtained funds to be found guilty of money laundering.

Penalties and Forfeiture

The penalties for money laundering in Japan vary depending on the type of offence and the maximum sentence. The Anti-Drug Special Provisions Act and the Act on Punishment of Organised Crimes both provide for:

  • Imprisonment
  • Fines as punishment for money laundering activities
  • Forfeiture of illegally obtained funds to prevent them from being used to further criminal activity

Victim Compensation

The Japanese government has implemented a victim compensation procedure to ensure that victims of crime receive fair compensation for their losses. The court may order the conversion of illegally obtained funds to money and distribute it to the victims.

Limitation Periods

The limitation period governing money laundering prosecutions in Japan is three, five or seven years, depending on the maximum sentence of the offence.

Extraterritorial Reach

Japanese AML laws have extraterritorial reach, applying to:

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