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.
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August 30, 2021