Japan's measures to combat money laundering and terrorist financing

Publication details

Language

English

Country

Japan

Mutual Evaluation Japan - 2021

Filename
Mutual-Evaluation-Report-Japan-2021.pdf
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5 MB
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application/pdf
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The Financial Action Task Force and the Asia-Pacific Group on Money Laundering assessed Japan’s AML/CFT system. The Mutual Evaluation Report of Japan is a comprehensive review of the effectiveness of Japan’s measures and their level of compliance with the FATF Recommendations. This includes an assessment of Japan’s actions to address the risks emanating from UN and domestically designated terrorists and terrorist organisations. The report does not address the justification that led to the domestic designation of an entity as a terrorist or terrorist group or organisation. .

Paris, 30 August 2021. Japan’s measures to combat money laundering and terrorist financing are delivering results, but the country needs to prioritise efforts in certain areas to improve the effectiveness of the Japanese anti-money laundering and counter terrorist financing (AML/CFT) framework.

Authorities in Japan have a good understanding of the money laundering and terrorist financing risks they face and have been at the forefront of AML/CFT measures in areas that present major risks for the country.

Japan is delivering good results in the collection and use of financial intelligence to investigate and prosecute money laundering and terrorist financing. It also demonstrated that it is providing constructive cooperation with counterparts in other countries.

While the terrorist financing risk in Japan is low, law enforcement needs to focus more on the laundering of proceeds in complex large-scale cases often involving fraud and drug-related crimes, including addressing the key risk areas, such as the risks associated with organised crime groups “the Boryokudan”. Authorities also need to increase efforts in the confiscation of criminal proceeds.

Authorities in Japan proactively conduct outreach to businesses about the risks of proliferation financing. However, the country needs to ensure the effective implementation of measures that prevent the unwitting facilitation of sanctions evasion.

Japan has taken robust action to address risks linked to virtual assets and their service providers and now needs to fully implement the measures to prevent their abuse.

Japanese authorities also need to prioritise efforts to improve the requirements for financial and non-financial institutions to prevent money laundering and terrorist financing, including customer due diligence, and improve access to beneficial ownership information to prevent the misuse of legal persons and arrangements.

The FATF adopted this report at its June 2021 Plenary meeting.

 

Technical Compliance

Ratings which reflect the extent to which a country has implemented the technical requirements of the FATF Recommendations.

Japan - Mutual Evaluation 2021

R.1 - Assessing risk & applying risk-based approach
LC
R.2 - National cooperation and coordination
PC
R.3 - Money laundering offence
LC
R.4 - Confiscation and provisional measures
LC
R.5 - Terrorist financing offence
PC
R.6 - Targeted financial sanctions related to terrorism & terrorist financing
PC
R.7 - Targeted financial sanctions related to proliferation
PC
R.8 - Non-profit organisations
NC
R.9 - Financial institution secrecy laws
C
R.10 - Customer due diligence
LC
R.11 - Record keeping
LC
R.12 - Politically exposed persons
PC
R.13 - Correspondent banking
LC
R.14 - Money or value transfer services
LC
R.15 - New technologies
LC
R.16 - Wire transfers
LC
R.17 - Reliance on third parties
R.18 - Internal controls and foreign branches and subsidiaries
LC
R.19 - Higher-risk countries
LC
R.20 - Reporting of suspicious transactions
LC
R.21 - Tipping-off and confidentiality
C
R.22 - DNFBPs: Customer due diligence
PC
R.23 - DNFBPs: Other measures
PC
R.24 - Transparency and beneficial ownership of legal persons
PC
R.25 - Transparency and beneficial ownership of legal arrangements
PC
R.26 - Regulation and supervision of financial institutions
LC
R.27 - Powers of supervisors
LC
R.28 - Regulation and supervision of DNFBPs
PC
R.29 - Financial intelligence units
C
R.30 - Responsibilities of law enforcement and investigative authorities
C
R.31 - Powers of law enforcement and investigative authorities
LC
R.32 - Cash couriers
LC
R.33 - Statistics
LC
R.34 - Guidance and feedback
LC
R.35- Sanctions
LC
R.36 - International instruments
LC
R.37 - Mutual legal assistance
LC
R.38 - Mutual legal assistance: freezing and confiscation
LC
R.39 - Extradition
LC
R.40 - Other forms of international cooperation
LC

C = compliant   |   LC = largely compliant     |   PC = partially compliant   |   NC = non-compliant

Effectiveness

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Japan - Mutual Evaluation 2021

IO1
SE
IO2
SE
IO3
ME
IO4
ME
IO5
ME
IO6
SE
IO7
ME
IO8
ME
IO9
ME
IO10
ME
IO11
ME

HE = high level of effectiveness   |   SE = substantial level of effectiveness    |   ME = moderate level of effectiveness   |   LE = low level of effectiveness

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