Financial Crime World

Combating Money Laundering and Terrorist Financing in Japan

Crimes as Predicate Offences for Concealing of Drug Crime Proceeds

Japan has enacted laws to combat the menace of drug-related crimes by criminalizing the concealing of proceeds from such illegal activities. These laws provide for punishment, confiscation or forfeiture of assets derived from drug-related offenses.

Terrorist Financing Act

In addition to combating drug-related crimes, Japan has also enacted laws to prevent terrorist financing. The Terrorist Financing Act punishes individuals who provide or collect funds intended for terrorist activities.

Risk-Based Approach

To combat money laundering and terrorist financing, Japan’s National Public Safety Commission prepares a risk assessment report that identifies high-risk transactions and businesses. This report serves as a guide for financial institutions and other specified business operators to implement effective anti-money laundering and combating the financing of terrorism measures.

Financial Institutions

  • Risk Reduction Measures: Financial institutions in Japan, including banks and insurance companies, are required to take various risk reduction measures to prevent money laundering and terrorist financing.
    • Customer due diligence
    • Reporting of suspicious transactions
    • Supervision by authorities

Designated Non-Financial Businesses and Professions

  • Guidelines: In addition to financial institutions, designated non-financial businesses and professions, such as real estate brokers and lawyers, are also required to implement anti-money laundering and combating the financing of terrorism measures.
  • Risk Identification: The government identifies risks and formulates guidelines for these industries to prevent misuse.

Non-Profit Organizations

  • Prevention Measures: The Financial Action Task Force (FATF) recommends that countries take measures to prevent non-profit organizations from being misused for terrorist financing purposes. Japan has implemented measures to ensure that such organizations are not used for illegal activities.

Beneficial Ownership Disclosure

  • Disclosure Requirements: To combat money laundering and terrorist financing, Japan requires beneficial ownership disclosure by legal persons.
    • Companies must disclose the true owners of their shares or assets.
    • Notaries also verify beneficial ownership information at the time of company registration.

Financial Intelligence Unit

  • Analysis and Dissemination: Japan’s Financial Intelligence Unit (FIU), known as the Japan Financial Intelligence Center (JAFIC), receives and analyzes suspicious transaction reports from financial institutions and disseminates analysis results to law enforcement agencies. This helps support the government’s anti-money laundering and combating the financing of terrorism efforts.

Enforcement and Asset Freezing

  • Investigation, Prosecution, and Asset Freezing: To combat money laundering and terrorist financing, Japan has implemented strict measures, including investigation, prosecution, and asset freezing.
  • Prevention of Illegal Activities: The country has also implemented measures to prevent illegal assets from being used for criminal activities.

Conclusion

Japan has taken a comprehensive approach to combating money laundering and terrorist financing by implementing laws, regulations, and measures that target various industries and individuals involved in these illegal activities.