Japan - fatf-gafi.org

1 1060517676 August 2021 Anti-money laundering and counter-terrorist financing measuresJapanAnti-money laundering and counter-terrorist financing measuresJapan mutual Evaluation Report2021 The Financial Action T ask Force (F ATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CTF) standard.

2 For more information about the FATF, please visit the website: This document and/or any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. This assessment was adopted by the FATF at its June 2021 Plenary meeting. Citing reference: 2021 FATF/OECD and APG-. All rights reserved. No reproduction or translation of this publication may be made without prior written permission. Applications for such permission, for all or part of this publication, should be made to the FATF Secretariat, 2 rue Andr Pascal 75775 Paris Cedex 16, France (fax: +33 1 44 30 61 37 or e-mail: Photo Credit - Cover: Getty Images FATF (2021), Anti-money laundering and counter-terrorist financing measures J apan, Fourth Round mutual Evaluation Report, FATF, Paris Anti-money laundering and counter-terrorist financing measures in Japan 2021 | FATF, APG Table of Contents Executive Summary.)

3 3 Key Findings .. 3 Risks and General Situation .. 6 Overall Level of Compliance and Effectiveness .. 6 Priority Actions .. 12 Effectiveness & Technical Compliance Ratings .. 14 mutual EVALUATION REPORT OF Japan .. 15 Preface .. 15 Chapter 1. ML/TF RISKS AND CONTEXT .. 17 ML/TF Risks and Scoping of Higher Risk Issues .. 17 Materiality .. 21 Structural Elements .. 22 Background and Other Contextual Factors .. 23 Chapter 2. NATIONAL AML/CFT POLICIES AND COORDINATION .. 41 Key Findings and Recommended 41 Immediate Outcome 1 (Risk, Policy and Coordination) .. 43 Chapter 3.

4 LEGAL SYSTEM AND OPERATIONAL ISSUES .. 53 Key Findings and Recommended 53 Immediate Outcome 6 (Use of financial intelligence) .. 58 Immediate Outcome 7 (ML investigation and prosecution) .. 68 Immediate Outcome 8 (Confiscation) .. 82 Chapter 4. TERRORIST FINANCING AND FINANCING OF 91 Key Findings and Recommended 91 Immediate Outcome 9 (TF investigation and prosecution) .. 95 Immediate Outcome 10 (TF preventive measures and financial sanctions) .. 103 Immediate Outcome 11 (PF financial sanctions) .. 109 Chapter 5. PREVENTIVE MEASURES .. 119 Key Findings and Recommended 119 Immediate Outcome 4 (Preventive Measures).

5 123 Chapter 6. SUPERVISION .. 137 Key Findings and Recommended 137 Immediate Outcome 3 (Supervision) .. 141 Chapter 7. LEGAL PERSONS AND ARRANGEMENTS .. 155 Key Findings and Recommended 155 Immediate Outcome 5 (Legal Persons and Arrangements) .. 157 Chapter 8. INTERNATIONAL CO-OPERATION .. 169 Key Findings and Recommended 169 Immediate Outcome 2 (International Co-operation) .. 170 2 Anti-money laundering and counter-terrorist financing measures in Japan 2021 | FATF, APG TECHNICAL COMPLIANCE .. 185 Recommendation 1 Assessing risks and applying a risk-based approach.

6 185 Recommendation 2 National co-operation and co-ordination .. 188 Recommendation 3 Money laundering offence .. 190 Recommendation 4 Confiscation and provisional measures .. 194 Recommendation 5 - Terrorist financing offence .. 196 Recommendation 6 - Targeted financial sanctions related to terrorism and terrorist financing .. 200 Recommendation 7 Targeted financial sanctions related to proliferation .. 206 Recommendation 8 Non-profit organisations .. 209 Recommendation 9 Financial Institution Secrecy Laws .. 212 Recommendation 10 Customer Due Diligence (CDD).

7 213 Recommendation 11 Record 217 Recommendation 12 Politically Exposed Persons (PEPs) .. 219 Recommendation 13 Correspondent Banking .. 220 Recommendation 14 Money or value transfer services (MVTS) .. 221 Recommendation 15 New technologies .. 223 Recommendation 16 Wire transfers .. 227 Recommendation 17 Reliance on Third Parties .. 231 Recommendation 18 Internal Controls and Foreign Branches and Subsidiaries .. 231 Recommendation 19 Higher Risk Countries .. 233 Recommendation 20 Reporting of suspicious transaction .. 234 Recommendation 21 Tipping off and confidentiality.

8 235 Recommendation 22 DNFBPs: Customer due diligence .. 235 Recommendation 23 DNFBPs: Other measures .. 238 Recommendation 24 Transparency and beneficial ownership of legal persons .. 239 Recommendation 25 Transparency and beneficial ownership of legal arrangements .. 246 Recommendation 26 - Regulation and supervision of financial institutions .. 249 Recommendation 27 Powers of Supervision .. 253 Recommendation 28 - Regulation and supervision of DNFBPs .. 255 Recommendation 29 - Financial intelligence units .. 257 Recommendation 30 Responsibilities of Law Enforcement and Investigative Authorities.

9 259 Recommendation 31 Powers of Law Enforcement and Investigative Authorities .. 260 Recommendation 32 Cash couriers .. 262 Recommendation 33 Statistics .. 263 Recommendation 34 Guidance and feedback .. 264 Recommendation 35 Sanctions .. 265 Recommendation 36 International instruments .. 266 Recommendation 37 mutual Legal Assistance .. 267 Recommendation 38 MLA Freezing and Confiscation .. 270 Recommendation 39 MLA Extradition .. 272 Recommendation 40 Other forms of international cooperation .. 274 Summary of Technical Compliance Key Deficiencies.

10 281 Glossary of Acronyms .. 288 Anti-money laundering and counter-terrorist financing measures in Japan 2021 | FATF, APG Executive Summary 1. This report summarises the anti-money laundering and counter-terrorist financing (AML/CFT) measures in place in Japan as at the date of the on-site visit (29 October - 15 November 2019). It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Japan s AML/CFT system, and provides recommendations on how the system could be strengthened. Key Findings a) Japan has a good understanding of the main elements of money laundering (ML) and terrorism financing (TF) risks, mainly based on the large number of assessments conducted.