Japan’s efforts in the global fight against money laundering and terrorist financing
| Date | 01 July 2004 |
| DOI | https://doi.org/10.1108/13685200410809959 |
| Published date | 01 July 2004 |
| Pages | 261-263 |
| Author | Koji Kishima |
| Subject Matter | Accounting & finance |
Japan's Eorts in the Global Fight against Money
Laundering and Terrorist Financing
Koji Kishima
MEASURES TAKEN BY JAPAN
The Law for Criminalisation of the Financing of
Terrorism was approved by the Diet on 5th June,
2002. The ®nancing of terrorism has already been
substantially criminalised under the current Japanese
legal system, which basically requires that a principal
actually commence the commission of a criminal act
as a precondition for punishment. This law crimina-
lises and punishes the ®nancing of terrorism even
when a principal has not yet commenced the com-
mission of the criminal act. This law also makes it poss-
ible to punish acts of ®nancing committed outside
Japanese jurisdiction. At the same time, the Anti-
Organised Crime Law has been amended to expand
money laundering predicate oences to cover such
oences, so as to enable seizure or con®scation of
funds used or allocated for the ®nancing of terrorism
and to require ®nancial institutions to submit reports
on transactions suspected to be related to terrorism.
The Law on Customer Identi®cation and Reten-
tion of Records on Transactions with Customers by
Financial Institutions was approved by the Diet on
22nd April, 2002, and took eect on 6th January,
2003. Adequate customer due diligence is essential to
combat abuse of the ®nancial system by money laun-
derers or terrorists as well as to ensure eective assets-
freezing actions. This law obliges ®nancial institutions
to strengthen customer identi®cation and to keep
records on customer identi®cation and on domestic
and international transactions. The law establishes a
set of sanctions against their noncompliance. It is
noted that it also prohibits customers from notifying
false names and other particulars to ®nancial insti-
tutions and that a penalty will be imposed on a custo-
mer who violates this prohibition. The law also has the
eect of improving the quality of the information
which constitutes the suspicious transaction report.
Financial institutions are also required to comply
with customer due diligence. Individual ®nancial
institution laws, such as the Bank Law, deal with
enforcement of such compliance of ®nancial insti-
tutions. The Supervisory Bureau of the Financial Ser-
vices Agency (FSA) issued an order on 4th April,
2003 to a securities ®rm that breached customers'
due diligence to improve its procedure to secure
compliance with customer identi®cation.
An amendment to the Foreign Exchange and
Foreign Trade Law was approved by the Diet on
24th April, 2002. By this amendment, the same legal
obligations and sanctions on customer due diligence
are imposed on foreign exchange transactions. In
addition, the law establishes a legal basis and pro-
cedures for sharing information, particularly classi®ed
information related to terrorists, among competent
ministries and agencies for freezing actions.
With these legal measures, the Japanese govern-
ment rati®ed the UN Convention for the Suppression
of the Financing of Terrorism in June 2002.
The Japanese government has been positively
taking measures to ®ght against money laundering
and the ®nancing of terrorism. Japan is a founding
member of the Financial Action Task Force
(FATF). It participated enthusiastically in a series of
the FATF meetings, where the updating of the 40
Recommendations and guidelines for Eight Special
Recommendations have been discussed.
The FSA uses its authority on the existing anti-
money laundering and combating the ®nancing of ter-
rorism (AMT/CFT) legal framework in cases where
terrorists' funds stem from proceeds of crime. The
UN Security Council Resolutions 1267 and 1333
mentioned Taliban members and related entities. In
accordance with these resolutions, the FSA has issued
circulars to request ®nancial institutions to report
transactions suspected through their connections
with Taliban-related individuals and/or entities to
the Japan Financial Intelligence Oce ( JAFIO). The
JAFIO receives and analyses these reports, and pro-
vides law enforcement agencies, such as the police
and prosecutors, with the information relevant to
their investigation.
The paper now discusses the performance of the
Japanese Financial Intelligence Unit (FIU), JAFIO.
JAFIO receives and analyses suspicious transaction
reports ®led by ®nancial institutions all over Japan.
The special feature of the FIU is that its sta comes
not only from the FSA itself but also from a variety
of law enforcement agencies. This arrangement
Page 261
Journal of Money Laundering Control Ð Vol. 7 No. 3
Journalof Money Laundering Control
Vol.7, No. 3, 2004, pp. 261± 263
#HenryStewart Publications
ISSN1368-5201
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