Risk-Based Approach Crucial for Financial Crime Prevention in Japan
Japan’s financial institutions and authorities are being urged to adopt a risk-based approach to effectively implement global anti-money laundering and terrorist financing standards. This approach involves identifying, assessing, and mitigating the specific risks associated with money laundering and terrorist financing.
The Importance of a Risk-Based Approach
By taking a tailored approach, Japanese banks and authorities can:
- Allocate resources more efficiently, targeting high-risk areas
- Apply simplified measures where necessary
- Prevent inappropriate de-risking behavior, which has been a major concern globally in recent years
A New Guidance Document for Japan’s Banking Sector
A new guidance document is being issued to help Japan’s banking sector design and implement the risk-based approach. The document consists of three sections:
Key Elements Overview
- National risk assessments
- Regulatory frameworks
- A common understanding among supervisory authorities and banks of what constitutes a robust risk-based approach
Specific Guidance for Banking Supervisors
- Oversight of banking institutions’ risk management practices
- Reviewing and updating risk assessment methodologies
- Ensuring effective communication with banks on risk-based approaches
Practical Advice for Banks
- Identifying and assessing risks specific to their institution
- Implementing measures to mitigate identified risks
- Continuously monitoring and reviewing risk management practices
The Role of the Financial Action Task Force (FATF)
The FATF, an international organization responsible for setting global standards on anti-money laundering and terrorist financing, has been instrumental in promoting the risk-based approach worldwide. The FATF Recommendations provide a framework for countries, including Japan, to implement effective measures against money laundering and terrorist financing.
Contact Information for Further Information
For further information, journalists are encouraged to contact the FATF Secretariat at +33 (0)1 45 24 90 90 or email contact@fatf-gafi.org.