Silviase/jgov_v1.4_full_ann huggingface dataset:
# Chapter 5 Promotion of International Cooperation

Section1 Need for International Cooperation on AML/CFT Measures

Economy and financial services are widely globalized today, and money transfers can be made instantly across borders. There are a number of cases in which crime and terrorist organizations attempt to evade law enforcement authorities' investigations by transferring criminal proceeds to foreign countries, and terrorist funds through third-party nations.

Non-cooperative countries and regions, or those taking insufficient AML/CFT measures are likely to be misused as an escape route for money-laundering or terrorist financing.

It is in this context that no jurisdiction can be outside the global network to tackle money laundering and terrorist financing. Every country or region needs to closely cooperate with others in making and implementing measures against this, so relevant authorities can trace and detect illicit proceeds and prevent criminal organizations from abusing international financial system for illicit purposes.

Therefore, anti-money laundering measures are taken in FATF (Financial Action Task Force on Money Laundering) and other various international organizations.

From the inception of the Japan Financial Intelligence Office (JAFIO), Japan's FIU had actively participated in the deliberations at FATF (Financial Action Task Force on Money Laundering) and other international institutions and discussed this matter with its global partners.

JAFIC (Japan Financial Intelligence Center), Japan's new FIU, established in April 2007, is needed not only to take over the achievements of JAFIO, but also to seek to collaborate even more vigorously with other countries in promoting global implementations of effective AML/CFT measures.

## Section2 Activities of International Institutions and Japan's Participation

## Paragraph1 FATF

## 1 FATF

FATF (Financial Action Task Force on Money Laundering) is an intergovernmental body established by the "Economic Declaration" of the 1989 Arche Summit Communiqué to promote international cooperation on AML measures. After the September 11US terrorist attacks of 2001, FATF has also taken the initiative in the promotion of international CFT measures. FATF has 32 member jurisdictions (including Japan) and 2 international organizations as of December 2008.
Services Agency, have participated in tri-annual plenary meetings and working groups on money laundering typologies. Even after FIU was transferred from JAFIO to JAFIC, JAFIC continued to actively participate in the discussion for New AML/CFT measures and sent several staff members to tri-annual plenary meetings in 2008. At the Third Mutual Evaluation of Japan, JAFIC has participated as part of Japanese government, and received reputation.

Moreover, JAfic sent one representative as a member of the assessment team for the Mutual Evaluation of Korea in November 2008.

## Paragraph2 APG

## 1 APG

APG (Asia/Pacific Group on Money Laundering) is an international cooperative body established in February 1997 at the FATF 4th Asia/Pacific Money-Laundering Symposium held in Thailand to promote anti-money laundering measures in non-FATF member jurisdictions in the Asia/Pacific region.

As of December 2008, the APG consists of 39 jurisdictions, including Japan.

## 2 Activities of APG

APG Annual Meeting (Indonesia)

The main activities of APG are as follows.

1. Promotion of compliance with FATF Recommendations in the Asia/Pacific region

2. Promotion of legislation on AML/CFT in the APG member jurisdictions

3. Mutual evaluations on APG member jurisdictions

4. Information exchange and analysis on the trend of money-laundering in the Asia/Pacific region

## 3 Participation of JAFIC in APG

Japan is one of the founding members of APG and has been actively contributing to APG, much as it has with FATF. For example, the first and second typologies meetings in March 1998 and March 1999 were held in Tokyo and Japan took the role of co-chair with Australia between July 2004 and June 2006.

This approach has not changed even after the function of FIU was transferred from JAFIO, and JAFIC has sent its staff members to the annual meetings and the typology meetings since its establishment. And in July 2008, the delegates participated in the annual meeting held in Indonesia and in the debates on the mutual evaluations of Canada, Singapore, Hong Kong, and other jurisdictions.

Furthermore, some stuff members were also sent from JAFIC to the typologies meeting held in Sri Lanka in October 2008 to participate in the study on the best practice of information analysis at FIUs and on the latest modus operandi and trend of money laundering, and provided information such as presenting the results of analysis of recent cases on methods of money laundering misusing foreign trade payments.

## Paragraph 3 Egmont Group

## 1 Egmont Group

The Egmont Group is an international forum established mainly by FIUs of several European nations and the United States in April 1995 with the goal of promoting cooperation, such as information exchange
and training, between FIUs around the world engaging in AML measures. The group is named after the Egmont castle where the first plenary session was held. Although the Egmont Group was established as an informal forum at beginning, it has become an internationally-recognized official body at present, through the adoption of the Egmont Group Charter at the May 2007 annual plenary in Bermuda and the establishment of its permanent Secretariat in Toronto, Canada. The Egmont Group consists of FIUs of 107 jurisdictions as of December 2008.

## 2 The Main Plenary Meeting of the Egmont Group

In addition to the annual plenary meeting in which representatives from all members of FIU attend, the Egmont Group has the following working groups, which hold meetings about three times a year respectively.

1. The Legal Working Group (LWG) which reviews the candidacy of potential members and handles all legal aspects and matters of principle within Egmont Group, including cooperation between FIUs

2. The Training Working Group (TWG) which identifies training needs and opportunities for FIU personnel, and conducts training seminars for Egmont members as well as for non-Egmont jurisdictions

3. The Outreach Working Group (OWG) which works to create a global network of FIUs by identifying candidates for membership and working with those countries to ensure that they meet international standards

4. The Operational Working Group (OpWG) which seeks to bring FIUs together on typologies development and long-term strategic analytical projects

5. The IT Working Group (ITWG) which provides advice and technical assistance to new and existing FIUs to develop, enhance, or redesign their IT systems, and examines new software applications that might facilitate analytical work

## 3 Participation of JAfic in the Egmont Group

Upon establishing JAFIO within the Financial Supervisory Agency (later the Financial Services Agency) as a Japanese version of FIU, Japan applied for membership in the Egmont Group, and was granted it in May 2000 at the 8th annual plenary held in Panama. JAFIO actively participated in the activities of the Egmont Group. It sent personnel to working group meetings, as well as to the annual plenary meeting, and took part in the construction of the Egmont Group Charter. JAFIC also undertook the role of sponsor FIU (in co-sponsorship with the Thailand FIU) in the application procedures for Myanmar FIU, which is currently not yet an Egmont Group member. JAFIC took over the function of Japan's FIU from JAFIO by the partial enactment of the Act on Prevention of Transfer of Criminal Proceeds in April 2007, and was granted the Egmont Group membership as the new Japan's FIU at the 15th Annual Plenary Meeting held in Bermuda in May 2007. In 2008, the representatives were sent to a working group meeting in Chili in March, the annual meeting held in Korea in May, a working group meeting in Canada in

Egmont Group Annual Meeting (Korea)

On-site Visit of Mongol FIU
October, and participated in the discussions on the principles related to the exchange of information between FIUs, etc.

Moreover, JAFLC has taken over the role of sponsor FIU in the application procedures for the FIU of Myanmar into the Egmont Group, from the Japan Financial Intelligence Office (JAFIO). In 2008, Japan became a sponsor FIU for the FIU of Mongol, and carried out an on-site visit in Mongol in December 2008, as part of the application procedures for the FIU of Mongol into the Egmont Group.

## Section3 Information Exchange with Foreign FIUs

## Paragraph1 Establishment of the Framework for Exchange of Information

It will not be successful without the timely exchange of suspicious transaction information with FIUs of other countries, tracing criminal proceeds or terrorist financing across borders, to detect money laundering and terrorist financing.

On the other hand, according to the 2nd paragraph of Article 12 of the Act on Prevention of Transfer of Criminal Proceeds, JAFIC may disseminate STRs to foreign FIUs on condition that there is a framework governing how the foreign FIUs should use the disseminated information. The framework as above mentioned is called MOU (Memorandum of Understanding) in the field of the international exchange for

FIUs such as Egmont Group. JAFIC has been coping with the negotiations for setting the framework for information exchange with numerous foreign FIUs in order to constructively exchange necessary information with them. Since its establishment of April 2007, JAFIC has agreed on such a framework, with the FIUs of 12 countries and regions with close geographical and economical relations (Hong Kong, Thailand, Malaysia, Belgium, Australia, the US, Singapore, Canada, Indonesia, the UK, Brazil and the Philippines) by the end of 2007. Moreover, in 2008, JAFIC has agreed on a framework with 5 countries (Switzerland, Italy, Portugal, South Korea and Romania).

MOU agreement with Korea FIU

## Paragraph2 Status of Information Exchange with Foreign FlUs

JAFIC exchanges suspicious transaction information with foreign FIUs positively and quickly.

The status of the information exchange with foreign FIUs in 2008 is shown in Table 5-1.

The number of requests for information to foreign FIUs, in particular, have been increasing, accompanying the improvement of the STR analysis system.

In 2008, JAFIC made 30 requests for further analysis to the relevant foreign FIUs for information, such as, the flow of suspicious funds remitted out of Japan, the source of remittance from abroad, etc., JAFIC has always successfully and rapidly obtained needed information that was requested, as well as such useful information as foreign entities' involvement, etc. from the requested FIUs.
Table5-1 Exchange of STRs with Foreign FIUs

For such a smooth exchange of information, JAFIC actively carries out various activities such as learning how to analyze information from foreign FlUs and how to review the status of funds information by foreign investigation agencies. JAFIC has also participated in meaningful discussions on the activation of the exchange of information from now, by visiting FlUs in countries and jurisdictions where there is a need for close coordination, especially in countermeasures against money laundering and terrorist financing, and countries and jurisdictions where there is no framework for the exchange of information.

Achievements in 2008 are as follows;

April Participation in the training session for measures against cash smuggling hosted by the FIU of Australia (AUSTRAC) (in Jakarta)

August Information Exchange with the FIU of France (TRACFIN) (in Paris)

September Information Exchange with the FIU of Hong Kong (JFIU) (in Hong Kong)

October Information Exchange with the FIU of England (SOCA) (in London)

Information Exchange with the FIU of France (TRACFIN) (in Paris)

November Individual information exchange with the FIU of Hong Kong, Hong Kong police, at East Asia Regional Organized Crime Countermeasure Conference (in Tokyo)

Information Exchange with Taiwan FIU (MLPC) (in Taipei)

Participation in the South East Asia Financial Investigation Seminar held by the FIU of Hong Kong (in Hong Kong)

December Participation in the training session for measures against cash smuggling hosted by the FIU of Australia (in Manila)

Information Exchange with the FIU of China (CAMLMAC) (in Beijing)

On-site Survey of the FIU of Mongol for its application to the Egmont Group (in Ulan Bator)

Note: locations of the meetings are in parentheses (___)

Information Exchange with Hong Kong FlU

Information Exchange with China FlU
Special Recommendation IV rated PC. Japan will report back to the Plenary and provide information on the actions it has or is taking to address the factors / deficiencies underlying Recommendations rated PC and NC in 2010, two years after the MER is discussed.

Table 5-2 Results of the Third FATF Mutual Evaluation of Japan

Recommendation	Outline of Recommendation	Rating	Recommendation	Outline of Recommendation	Rating
1	Money laundering offence	LC	25	Guideline & feedback	LC
2	Money laundering offence - mental element and corporate liability	LC	26	FIU	LC
3	Confiscation and provisional measures	LC	27	Investigation for money laundering and terrorist financing	LC
4	Secrecy laws consistent with the Recommendations	C	28	Power of competent authorities	C
5	Customer due diligence (financial institutions)	NC	29	Supervisory authorities	LC
6	Individuals who are or have been entrusted with prominent public function in a foreign country	NC	30	Resources, integrity and training	LC
31	National cooperation	LC
7	Correspondent banking	NC	32	Statistics	LC
8	Misuse of new technologies & non face-to-face business	PC	33	Legal person-beneficial owners	NC
9	Rely on third parties and introducers for Customer due diligence	N/A	34	Legal arrangements (trust) - beneficial owners	NC
10	Obligation to maintain records of customer identification and transaction record	LC	35	Convention	PC
11	Obligation to pay special attention for unusual transaction	PC	36	Mutual legal assistance	PC
12	Customer due diligence by DNFBP (designated non-financial businesses and professions)	NC	37	Dual criminality	PC
13	Suspicious Transaction Report by financial institutions	LC	38	Mutual legal assistance on confiscation and freezing	LC
14	Obligation to protect reporter	LC	39	Extradition	PC
15	Obligation to maintain internal controls	NC	40	International cooperation (information exchange with foreign counterparts)	LC
16	Suspicious Transaction Report by DNFBP	PC	I	Implement United Nation instruments	PC
17	Sanction for non-compliance	LC	II	Criminalist terrorist financing	PC
18	Shell bank (bank incorporated in a jurisdiction in which it has no physical presence)	PC	III	Freeze and confiscate terrorist assets	PC
19	Other forms of reporting	C	IV	Suspicious transaction reporting related to terrorism	LC
20	Other DNFBP & secure transaction technique	C	V	International cooperation for terrorism	PC
21	Special attention for higher risk countries	NC	VI	Money/value transfer services	PC
22	Foreign branches & subsidiaries	NC	VII	Wire transfer rules	LC
23	Supervisory obligation for financial institutions	LC	VIII	Non profit organization	PC
24	Supervisory obligation for DNFBP	PC	IX	Cross border declaration & disclosure (Cash courier)	NC
## Chapter 6 Money Laundering Trends

In order to take effective AML measures, it is necessary to understand the scale and modus operandi of actual money laundering activities. JAFIC keeps statistics on cases related to money laundering and STRs for this reason. This Chapter deals with cases where money launderers and other criminals were arrested and, as a result of that, deprived of criminal proceeds.

As explained in Chapter 2, the Act on the Punishment of Organized Crime criminalizes control of enterprises by illicit proceeds (Article 9), concealment of criminal proceeds (Article 10) and receipt of criminal proceeds (Article 11), whereas the Anti-Drug Special Provisions Law criminalizes concealment of drug related criminal proceeds (Article 6) and receipt of drug related criminal proceeds (Article 7).

Typical money laundering conduct such as remitting criminal proceeds to a place where lax regulations hamper tracing efforts and depositing them into a fictitious account are captured by these provisions. It is necessary to know how many arrest for money laundering and how much confiscate of criminal proceeds to understand results of our efforts. This chapter summarizes confiscation of criminal proceeds and securance measures.

## Section1 Cases Cleared for Money Laundering Offences

## Paragraph1 Cases Cleared for Money Laundering Offences under the Act on the Punishment of Organized Crime

## 1 The number of Cases Cleared

There were 173 cases (4 less than the previous year) cleared for money laundering offences under the Act on the Punishment of Organized Crime in 2008, including 1 case of control of enterprises by illicit proceeds (1 more than the previous year), 134 cases of concealment of criminal proceeds, such as (3 less than the previous year), and 38 cases of receipt of criminal proceeds (2 less than the previous year). The cumulative total of cases cleared since the enforcement of the law is 755 cases.
Table 6-1 Number of cases cleared for Money Laundering Offences under the Act on the Punishment of Organized Crime

2000	2001	2002	2003	2004	2005	2006	2007	2008	Total
Management Control by Criminal Proceeds (Article 9)	0	0	0	0	0	0	1	0	1	2
Concealment of Criminal Proceeds (Article 10)	3 (1)	10 (5)	19 (9)	45 (25)	50 (29)	65 (21)	91 (18)	137 (35)	134 (41)	554 (184)
Receipt of Criminal Proceeds (Article 11)	0 (0)	2 (2)	9 (7)	11 (10)	15 (11)	42 (27)	42 (35)	40 (25)	38 (21)	199 (138)
Total	3 (1)	12 (7)	28 (16)	56 (35)	65 (40)	107 (48)	134 (53)	177 (60)	173 (63)	755 (323)

$ ^{*} $ The numbers in brackets represent the number of cases in which Boryokudan members were involved. (known to the National Police Agency)

When considering the violations of money laundering by each alleged offence according to the Act on the Punishment of Organized Crime, “black market finance” offences, such as violations of the Investment Law and the Money Lending Business Law were the most common with 65 cases, followed by 39 cases of fraud such as “Furikome” fraud, and 16 cases of distribution offences of obscene objects; in violation of the Law for Punishing Acts on Child Pornography, and 11 cases of opening a gambling place for profit and / habitual gambling. The same as last year, “black market finances” offences and fraud such as “Furikome” fraud were the two top ranking crimes with a total of 104 cases, and comprised approximately 60% of all money laundering offences. This shows that the source of criminal proceeds is from both of these crimes. (Furthermore, please refer to Paragraph 2 of this section regarding the number of cases for money laundering under the Anti-Drug Special Provisions Law)

## 2 Modus Operandi of Money Laundering observed in Cleared Cases

## (1) Examples of Concealment of Criminal Proceeds

In 2008, types of cases of concealment of criminal proceeds included the following,

• A case of systematic product scam using counterfeit credit cards to sell fraudulent goods.

• Victims deceived by a “Furikome” fraud group deposited fraud money into an account, and then suspect transferred the money to a different account using mobile banking from a cellphone (Case 1).

• Money obtained from an investor under the invest name of a foreign exchange marginal transaction was transferred to an account under the name of related third party (Case 2).

• A “black market finance” has the loanee to deposit interest into an account under another person's name, and conceals the withdrawal from that account into a safe deposit box under the name of a company owned by an accomplice (Case 4).

These situations show the various modus operandi used to evade investigation agencies.

Furthermore, a common aspect of concealment by a “black market finance” or “Furikome” fraud is having the loanee and fraud victim deposit money into a bank account under another person’s or a fictitious name. Also, using accounts in the name of another, etc., is still the main infrastructure of money laundering for non-face-to-face “black market finance” and “Furikome” fraud.
## [Case 1] (Concealment of criminal proceeds by “Furikome” fraud)

The suspect provided an account with mobile banking (bank transactions can be conducted by cell phone) to a “Furikome” fraud group, to be used in order to transfer deposits of fraud money. The suspect planned to commandeer the money deposited into the account by the victims first. He commandeered a total of approximately 30,000,000 yen in 88 cases over a period from August 2004 to April 2008, by methods including transferring the money to an illegally obtained and managed account under another person’s name, after confirming that the money was deposited into the account by mobile banking. He was arrested under the Act on the Punishment of Organized Crime (charged with concealment of criminal proceeds, etc.).

(September, Okayama Pref. Police)

### [Case 2] (Concealment of Criminal Proceeds under a fraudulent investment name such as Foreign Exchange Marginal Transaction, etc.)

The suspect, calling himself a fund coordinator, purchased and sold foreign exchange (foreign money) on the security of certain amount of margin (earnest money) in number of times the amount of earnest money. He solicited the investment idea that a large profit could be gained by publishing a fictitious investment business name on a website on the Internet. He was arrested for violation of Act on the Punishment of Organized Crime (charged with concealment of criminal proceeds, etc.) since the money received from the investors was deposited into an account under the name of a related third party.

(February, Osaka Pref. Police)

## [Case 3] (Concealment of Criminal Proceeds by systematic fraud under precious metal spot security deposit transactions)

A company manager conducting precious metal spot security transactions, solicited customers in violation of the law regarding specific business transactions. After conducting accounting procedures that he deposited mixed money amount to 400,000,000 yen obtained from 140 clients with the bank credit into an account which was actually managed by another company, for the purpose of a security deposit Loco-London scam, he made the general ledger and closing statements of the company as if “deposit money” showed a loss of more than 300,000,000 yen through net settlement transactions between the companies. These closing statements, etc., were attached to the corporate tax return submitted to the presiding tax office, which led to arrest for violation of Act on the Punishment of Organized Crime (charged with concealment of criminal proceeds, etc.).

(November, Chiba, Nagano Pref. Police)