Japan

1. Does Japan have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. Japan has the following legislation making it a criminal offence to engage in money laundering and/or terrorist financing.

• the Act on Special Provisions for the Narcotics and Psychotropics Control Act, etc, and Other Matters for the Prevention of Activities Encouraging Illicit Conduct and Other Activities Involving Controlled Substances through International Cooperation (“Anti-Drug Special Provisions Act”);
• the Act on Punishment of Organized Crimes and Control of Crime Proceeds (“Act on Punishment of Organized Crimes”); and
• the Act on Prevention of Transfer of Criminal Proceeds.

2. To whom does the legislation apply?

Both to individuals and businesses.

3. What does the legislation prohibit?

The Anti-Drug Special Provisions Act criminalises as money laundering concealment of drug crime proceeds, which includes:

• disguising facts with respect to the acquisition or disposition of drug crime proceeds;
• concealing drug crime proceeds; and
• disguising facts with respect to the source of drug crime proceeds; and
• receipt of drug crime proceeds.

The Act on Punishment of Organized Crimes criminalises as money laundering:

• managing an enterprise by the use of criminal proceeds;
• concealment of crime proceeds, which includes:

1. disguising facts with respect to the acquisition or disposal of crime proceeds;
2. concealing crime proceeds; and
3. disguising facts with respect to the source of crime proceeds; and
4. receipt of crime proceeds.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Although the legislation criminalises several activities as money laundering, there is no comprehensive definition of “money laundering”.

Prosecutors have to prove “crime proceeds,” but they do not have to prove the underlying criminal activity itself.

5. What level of intent or knowledge is required to establish a violation?

Money laundering violation requires intention or knowledge as the requirement of underlying criminal activities. Neither strict liability nor negligence standards apply to money laundering.

6. What are the potential penalties for infringing the legislation?

The criminal penalty for money laundering is imprisonment for up to five years or a fine of up to ¥10 million, or both. The maximum sentence varies according to the type of money laundering activities.

7. Does the legislation have extra-territorial reach?

The Japanese statutes can apply to non-citizens and non-residents who are involved in money laundering activities within the jurisdiction.

The Japanese legislation also applies to money laundering activities committed by Japanese nationals outside the jurisdiction’s borders.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

The Act on Prevention of Transfer of Criminal Proceeds requires the relevant institutions and persons (such as financial institutions) to conduct due diligence on customers and business partners.

The Act also requires the institutions and persons to determine whether property accepted from a customer is suspected to be criminal proceeds. If the property is suspected to be criminal proceeds or the customer is suspected of committing a certain crime, the relevant institutions and persons must promptly report the transaction to a competent administrative authority.

9. What are the potential penalties for failing to comply with these obligations?

The supervising authorities can exercise a supervisory power by collecting reports and conducting on-site inspections of the relevant institutions and persons, and provide the necessary guidance and advice, make the necessary suggestions, or issue a rectification order for non-compliance.

If the relevant institutions and persons have failed to submit reports or materials, submit false reports or materials, refused on-site inspections, or violated a rectification, criminal sanctions are applicable.

10. Who are the relevant enforcement authorities in Japan and what are their contact details?

The Japan Financial Intelligence Centre is the jurisdiction’s Financial Intelligence Unit (FIU). The contact details are as follows:

Japan Financial Intelligence Centre

2-1-2 Kasumigaseki Chiyoda-ku

Tokyo 100-8974

Japan

T: +81 335 810 141

https://www.npa.go.jp/sosikihanzai/jafic/index_e.htm