Banker's Academy AML Training by Country

Anti Money Laundering (AML) By Country: Japan

Anti Money Laundering (AML) in Japan

Money laundering in Japan is a persistent problem. Although Japan maintains a sound Anti Money Laundering (AML) system, the country still faces substantial risk of money laundering by organized crime and other domestic and international criminal elements.

The principal sources of laundered funds are narcotics trafficking and financial crimes (illicit gambling, loan-sharking, extortion, abuse of legitimate corporate activities, internet fraud schemes, and all types of property-related crimes), which are often linked to Japan’s organized criminal organizations.

Drug-related money laundering was first criminalized under The Anti-Drug Special Law that took effect in July 1992. This law also mandates the filing of suspicious transaction reports for suspected proceeds of drug offenses, and authorizes controlled drug deliveries. The legislation also creates a system to confiscate illegal profits gained through drug crimes. The seizure provisions apply to tangible and intangible assets, direct illegal profit, substitute assets, and criminally-derived property that has been commingled with legitimate assets.

Japan expanded its money laundering law beyond narcotics trafficking to include money laundering predicates such as murder, aggravated assault, extortion, theft, fraud, and kidnapping when it passed the 1999 Anti-Organized Crime Law, which took effect in February 2000. The law also extends the confiscation laws to include the additional money laundering predicate offenses and value-based forfeitures. It also authorizes electronic surveillance of organized crime members, and enhances the suspicious transaction reporting system.

Japan’s Financial Services Agency (FSA) supervises public-sector financial institutions and securities transactions. The FSA classifies and analyzes information on suspicious transactions reported by financial institutions, and provides law enforcement authorities with information. Japanese banks and financial institutions are required by law to record and report the identity of customers engaged in large currency transactions.

The Japan Financial Intelligence Center (JAFIC) serves as Japan’s Financial Intelligence Center. The JAFIC releases an annual report on the status of crimes of money laundering in Japan.

AML Training in Japan

As a member of the Financial Action Task Force (FATF), Japan requires financial institutions in the country to develop programs to combat against money laundering. Such programs should include the development of internal policies, procedures and controls, an ongoing employee training program and an audit function to test the system.

The Economy of Japan

Japan is the second largest economy in the world, after the United States, and third after the United States and China in terms of purchasing power parity.

Distinguishing characteristics of the Japanese economy include the cooperation of manufacturers, suppliers, distributors, and banks in closely-knit groups called keiretsu; relatively shallow international competition in domestic markets; the powerful enterprise unions and shuntō; cozy relations with government bureaucrats, and the guarantee of lifetime employment (shushin koyo) in big corporations and highly unionized blue-collar factories. Recently, Japanese companies have begun to gradually move away from some of these norms in an attempt to increase their global competitiveness and profitability (the latter due mostly to their increased reliance on equity rather than debt financing).

Banking In Japan

The central bank of Japan is the Bank of Japan.

According to its charter, the missions of the Bank of Japan are:

Issuance and management of banknotes.
Implementation of monetary policy.
Providing settlement services and ensuring the stability of the financial system.
Treasury and government securities-related operations.
International activities.
Compilation of data, economic analyses and research activities.

The Financial Services Agency (FSA) is the regulator of financial institutions in Japan.

Japanese Currency

The currency of Japan is the Yen. Current banknotes available are the 10,000, 5,000, 2,000 and 1,000 yen. Coins currently available are the 500, 100, 50, 10, 5 and 1 yen coins.