FATF’s Shift in Focus: Money Laundering through Non-Financial Sectors

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The Financial Action Task Force (FATF) has recently placed greater emphasis on detecting and preventing money laundering activities that utilize non-financial sectors. This shift in focus is reflected in the revised “40 Recommendations,” which now require operators outside of traditional financial institutions to implement customer identification and due diligence measures.

Japan’s Anti-Money Laundering Regime

Japan has been working to strengthen its anti-money laundering (AML) regime, with a focus on implementing international standards. The country’s AML/CFT (Combating the Financing of Terrorism) regime is based on the “Anti-Drug Special Provisions Law” and other domestic laws.

Key Developments

1992: Enactment of Anti-Drug Special Provisions Law

The Anti-Drug Special Provisions Law was enacted to combat money laundering connected with drug crimes.

2000: Expansion of Predicate Offenses

The Act on Punishment of Organized Crimes and Control of Crime Proceeds was enforced, expanding the scope of predicate offenses for money laundering and introducing a suspicious transaction reporting system.

2002: Combatting Terrorist Financing

The Act on Punishment of Financing of Offences of Public Intimidation was enacted to combat terrorist financing. The Act on Punishment of Organized Crimes was also revised to include terrorist financing as a predicate offense.

2003: Customer Identification Requirements

The Law on Customer Identification by Financial Institutions etc. was enacted, requiring financial institutions and other business operators to identify customers and report suspicious transactions.

2004: Addressing Fictitious Identities

The Customer Identification Act was revised to address the issue of fictitious identities being used for criminal purposes.

2007: Expansion of AML/CFT Measures

The Act on Prevention of Transfer of Criminal Proceeds was enacted, expanding the scope of AML/CFT measures to non-financial sectors.

2011: Ongoing Efforts

Amendments to the Act on Prevention of Transfer of Criminal Proceeds were made to address ongoing issues with money laundering and terrorist financing.

Furikome Fraud and Ongoing Challenges

Despite progress in Japan’s AML/CFT regime, the country continues to face challenges related to Furikome Fraud, a type of fraud that involves the use of call forwarding services. The government has been working to address these issues, including through public-private sector cooperation and regulatory reforms.

Conclusion

Japan’s anti-money laundering efforts have evolved significantly over the years, with a growing focus on non-financial sectors. While progress has been made, ongoing challenges remain, particularly in addressing the use of call forwarding services for criminal purposes. As the global AML/CFT landscape continues to evolve, Japan will need to stay vigilant and adapt its measures to address emerging threats.