Money Transfer Fraud Schemes Sweep Japan: Financial Institutions on High Alert
A Growing Concern: Money Laundering Cases Reach Record High in Japan
In 2022, a staggering record high of 583,317 transactions suspected as money laundering was reported in Japan, marking a 53% increase from the previous year. This alarming rise has raised concerns among financial institutions, businesses, and individuals about unwittingly becoming involved in illegal activities.
What is Money Laundering?
According to the National Police Agency, money laundering is defined as the act of disguising criminal proceeds to evade detection and apprehension by investigative authorities. The “laundered” funds can be used to finance criminal activities, potentially fueling organized crime.
Prohibited and Punishable: Strengthened Measures Against Money Laundering
Money laundering is prohibited by law in Japan, with statutory penalties increased in 2022 to strengthen measures against it. The process typically involves three stages:
- Placement: Concealing illegal funds into the financial system.
- Layering: Converting the funds into multiple layers of complexity to disguise their origin.
- Integration: Mixing the laundered funds with legitimate funds.
Forms of Money Laundering in Japan
In Japan, money laundering cases have taken various forms, including:
- Domestic exchange transactions
- Cash transactions
- International transfers
- The use of crypto assets (a significant concern in recent years)
Sophisticated Fraudulent Schemes: High-Profile Cases in 2022
Several high-profile cases in 2022 highlighted the sophistication of fraudulent schemes. These included:
- A group of males impersonating someone else to sell the rights to use electronic money obtained through fraud.
- Concealing assets by using a crypto address belonging to an unidentified person.
Strengthening Measures: Verification and Customer Identity
The Financial Services Agency is strengthening measures to prevent money laundering, including:
- Verification of transaction details
- Customer identity verification
Financial institutions regularly send customers documents to verify transactions and customer information, which may raise suspicions among some individuals. In cases where customer information verification requests are ignored, financial institutions may refuse to fulfill their obligations related to a transaction until the customer complies with the process.
Avoiding Illegal Activities: A Call to Action
The government is urging people to respond promptly when receiving documents from financial institutions and to cooperate with crime prevention efforts. As the number of money laundering cases continues to rise, financial institutions and individuals must remain vigilant to avoid unwittingly becoming involved in illegal activities.