Silviase/jgov_v1.4_full_ann huggingface dataset:
confiscation securance order of such criminal proceeds. Also, close coordination with the Public Prosecutor's Office shall be strengthened with regards the deprivation of criminal proceeds.

## (6) Promotion of international cooperation

The police should strengthen international cooperation by, for example, exchanging information with foreign FIUs, responding to revisions of international recommendations, and supporting foreign countries in implementing international recommendations.

The police have already put into practice, actively, as described in Chapter 6, the policies indicated by "the Guideline for Promotion of the Criminal Proceeds Control" through various criminal investigations.

Figure3-3 Overview of the promotion outline of measures against criminal proceeds

## Guideline for Promotion of the Criminal Proceeds Control Responsibilities of the National Police Agency and prefectural police and flow of information

## National Police Agency

Support for and PR/enlightenment of voluntary efforts of specified business operators

Collection, arrangement and analysis of information on criminal proceeds

Promotion of International coordination and cooperation

Ensuring confidentiality and information security

Dissemination of information and investigative instruction/coordination

Report of information necessary for promoting countermeasures against criminal proceeds

## Prefectural Police

Establishment of Task Force for fact-finding concerning criminal proceeds

Development of investigative structure for crimes related to criminal proceeds

PR and enlightenment activities

Promotion of investigation utilizing STRs

Collection of information for promoting countermeasures against criminal proceeds

Appropriate implementation of measures to confiscate criminal proceeds

Ensuring confidentiality and information security
## Section5 Cooperation with Business Operators and the Public

### Paragraph1 Explanation and Provision of Information, etc., on Seminars Targeting Specified Business Operators

## 1 Explanation of Seminars targeting Financial Institutions

JAFIC gave, together the Financial Services Agency, "Suspicious Transactions Reporting" seminars for financial institutions 17 times, in total at 12 places in Tokyo and at Local Finance Bureau of the like from October to November 2008, where it explained about cases of suspicious transactions reporting utilized by investigative authorities and points to keep in mind when filing the report and so on and answered the question made by employees of financial institutions.

## 2 Explanation of Seminars for Currency exchanging Operators

The “Briefing on Act on Prevention of Transfer of Criminal Proceeds” seminar for Currency exchanging operators was held by Finance Ministry 11 times in total at 6 places in Tokyo and Local Finance Bureau during May 2008. Within these, JAFIC employees participated 9 times, summarizing the law and explaining the obligations of specified business operators.

## 3 Public Service Announcement in Cooperation with Mass Media and PR Activities Using Posters/Leaflets

Upon the Act on Prevention of Transfer of Criminal Proceeds fully taking effect in March 2008, citizens are now more often required to cooperate in customer identifications. Prior to the enforcement of the said act, JAFIC called for necessary cooperation in customer identification through TV, radio and newspapers and disseminated background information of the act. In addition, JAFIC prepared posters and leaflets so that the targeted business operators, industry organizations, police offices, etc. throughout the country can make the public aware of the required procedure.

Explanation at a Seminar

Seminar for Currency exchanging Operators

## 犯罪收益移転防止法 平成20年3月1日施行

金融機関等、ファイナンスリース事業者、クレジットカード事業者、宅地建物取引業者、宝石・貴金属等取扱事業者、郵便物受取サービス業者、電話受付代行業者、司法書士、行政書士、公認会計士、税理士、弁護士
# Chapter 4

# Reports of Suspicious Transactions

The Act on Prevention of Transfer of Criminal Proceeds requires specified business operators to file a report to a competent administrative authority if a transaction is suspected to be related to criminal proceeds. This measure was made obligatory for the first time in the Anti-Drug Special Provisions Law and was carried over to the Act on Prevention of Transfer of Criminal Proceeds through the Act on the Punishment of Organized Crime.

## Section1 Outline of the Suspicious Transaction Report System

## 1 Purpose

The Suspicious Transaction Report System aims, by supporting investigation on money laundering and predicate offences, to prevent illegal use of the services of legal businesses and ensure their soundness and trust.

## 2 Cases in which Reporting is Required

Specified business operators are required to file an STR to a corresponding supervising authority, when they suspect, during the course of their businesses (types of the businesses listed in table 2-2), that assets they received are criminal proceeds or that their client commits an offence of concealment of criminal proceeds.

## 3 Announcement of List of Reference Cases of Suspicious Transactions

Specified business operators are expected to judge whether the concerned transaction is a suspicious transaction with their own knowledge and experience at that industry, taking into account the form of transaction, client attributes and conditions surrounding the transaction. It may well be the case, however, that some operators simply lack adequate understanding of money laundering and find it difficult to make an appropriate judgment. Therefore, in Japan, since the time of the Anti-Drug Special Provisions Law, "List of Reference Cases of Suspicious Transactions," has been issued for specified business operators as a guideline for reporting. It is often called the "Reporting Guideline." Under the Act on Prevention of Transfer of Criminal Proceeds, which covers a wider variety of specified business operators than before, competent supervisory authorities issue Reporting Guidelines, based on the characteristics of respective specified business operators.

These guidelines are listed as clarified in the introduction thereof, samples of suspicious transactions are intended merely for reference. This means, it is for the specified business operator to judge whether an individual case is a suspicious transaction, taking into account the client's attributes, conditions surrounding the transaction and other specifics of the transaction. All the transactions that appear to match the listed samples do not necessarily have to be reported as suspicious, while transactions that do not fall within any of them may still be suspicious and subject to reporting.

## 4 Flow of Suspicious Transactions Reporting

Information reported by specified business operators are collected at JAFIC, via the competent administrative authorities. JAFIC sorts and evaluates suspicious transaction reports, and then
disseminates selected the result of evaluation to investigative authorities such as Prefectural Police and Public Prosecutors Office, etc.

The investigative authority which receives STRs, uses them as clues for criminal investigation, detection of criminal proceeds and tracing the source of illicit funds. Moreover, JAFIC provides foreign FIUs spontaneously or on their request with information of overseas transactions so they can trace criminal proceeds transferred across borders.

Furthermore at JAFIC, a detailed analysis of STRs is carried out using the information gathered by the police for organized crime countermeasures, etc., and the result of analysis are disseminated to related Prefectural Police.

Figure4-1 Flow of STRs from specified business operators, through JAFIC to investigative authorities

## 5 Information Security Measures

Since STRs include sensitive information on individuals and business activities, JAFIC makes the utmost effort to prevent leakage, loss, damage, or other misconducts. National Public Safety Commission sets forth in its rules how relevant information should be handled and other information security measures.

Following are some of the security measures JAFIC takes.

(1) Management of Entering and Exiting

Terminals that can access information stored in the JAFIC database are located in a room with a door that is controlled by a biometric authentication system. Only a limited number of staff members are permitted to enter the room.

## (2) Three steps of Authentication

In order to access the information in the JAFIC database, three levels of authentication are required. In other words, the information can be reached only after authentication is done 3 times, in 3 different ways. In the authentication procedure, if more than one mistake occurs, access from the terminal is prohibited, and in this way use without permission is securely prevented.

## (3) Surveillance of Terminal

All processing operated at the terminal, such as file inquiries and printing, is monitored and recorded by surveillance software. This allows for tracing survey in case of illegal operation, as well as restraining illegal operation within the organization.

## (4) Physical Measures of Terminal

Each terminal is firmly affixed to a desk with a security wire, to prevent theft.
(5) Strengthening of Server Management

The server that contains reporting information is located in a server room with adequate security measures, and only qualified staffs are allowed to enter.

(6) Encryption of Terminal's Hard Disk Drive Information

The hard disk drives on the terminals that are used to access the database system are all encrypted. Therefore, if the hard disk drives are removed and taken out, the information recorded in the hard disk drive and all related programs will still be inaccessible.

(7) Encryption of Circuit

Transmission between the server and terminals is encrypted with a special circuit.

## Section2 Situation of Suspicious Transaction Reports

## 1 The change in the number of reported cases

As described in Chapter 1, although the system of suspicious transaction reports was established by the enforcement of the Anti-Drug Special Provisions Law in 1992, less than 20 cases were reported each year between 1992 and 1998, largely because the subjects of reporting was limited to proceeds derived from drug-related crimes. Under these conditions, that reporting system could not be considered to be fully functional. However, since the enactment of the Act on the Punishment of Organized Crime in 1999 (enforced in February 2000), crimes subjected in suspicious transaction reports was expanded from drug-related crimes to serious crimes, and the number of reports exceeded 1,000 cases in 1999. Since the enforcement of the Act on the Punishment of Organized Crime in the year 2000, the number of reports has increased each year, and has rapidly increased since the enforcement of the Act on Prevention of Transfer of Criminal Proceeds. The number of reports in 2008 was 235,260, an increase of 77,219 cases (48.9%), about 32.5 times increase compared to 2000.

Table4-1 Trend Diagram of Number of Reports of Suspicious Transactions (1992-1999)

1992	1993	1994	1995	1996	1997	1998	1999
Yearly number of Reports Received	12	17	6	4	5	9	13	1,059

Note: The notifications of 1992 are those made after July, the month the notification system was established.
Figure4-2 Trend Diagram of Number of Reports of Suspicious Transactions (2000-2008)

Number of Reports Received	7,242	12,372	18,768	43,768	95,315	98,935	113,860	158,041	235,260
Number of Reports Offered	5,329	6,752	12,417	30,090	64,675	66,812	71,241	98,629	146,330

Note 1: Reports that were received by the Financial Services Agency between February 2000 and March 2007 and by the National Public Safety Commission and the National Police Agency after April 2007.

Note 2: Reports that were disseminated by the Financial Services Agency between February 2000 and March 2007 and by the National Public Safety Commission and National Police Agency after April 2007.

The circumstances regarding the increase in reporting numbers can be thought to be

The tendency of financial institutions' strengthening of surveillance on illegal funds, along with an overall improvement of compliance awareness in society.

○ Permeation of the system of suspicious transaction reports in financial institutions.

○ Customer Due Diligence adopted “Risk-based Approach”.

Moreover, financial institutions, etc., have taken various measures, both tangibly and intangibly. In particular, many financial institutions, in which the number of reports has increased, have promoted training on countermeasures against money laundering with resources such as a handbook for employees and have improved the ability of individual employees, as well as strengthening the system to identify suspicious transactions, by increasing personnel in charge of money laundering countermeasures and the introduction of the detection systems for suspicious transactions.
## 2 Number of Reports by Business Types

The number of suspicious transaction reports that each category of businesses filed in 2008 is shown in table 4-2. Banks have the highest number of reports with 216,016 cases, or 91.8% of all reports, followed by Shinkin bank and Credit cooperative (13,218 cases, 5.6%), and financial instrument business operators (3,321 cases, 1.4%).

The low percentage of reports is from the financial instrument business operators such as Securities Company, which showed the highest increase of the number of reports in 2008 an increase of 182.9% compared to the previous year.

Table4-2 Number of Suspicious Transaction Reports by Business Types

Business Type	2007	2008	Increase/Decrease rate
Number of reports	%	Number of reports	%	Number of reports	%
Bank	133,699	84.6%	216,016	91.8%	82,317	61.6%
Japan Post	11,859	7.5%	722	0.3%	-11,137	-93.9%
Credit Union, Credit Association	10,237	6.5%	13,218	5.6%	2,981	29.1%
Financial instruments business operators	1,174	0.7%	3,321	1.4%	2,147	182.9%
Money Lending Business	397	0.3%	509	0.2%	112	28.2%
Agriculture and Forestry	294	0.2%	420	0.2%	126	42.9%
Labour Bank	189	0.1%	234	0.1%	45	23.8%
Insurance Company	48	0.0%	113	0.0%	65	135.4%
Other	144	0.1%	192	0.1%	48	33.3%
new business operators	Finance Lease	-	-	64	0.0%	-	-
Credit Card	-	-	365	0.2%	-	-
The Real Estate Transaction	-	-	21	0.0%	-	-
Dealer of Jewel and Precious metal and stones	-	-	8	0.0%	-	-
Receive postal items	-	-	57	0.0%	-	-
Telephone receiving services	-	-	0	0.0%	-	-
Total	158,041	100.0%	235,260	100.0%	77,219	48.9%

Note: Within the "Japan Post" in 2007, reports from "Japan Post Bank" "Japan Post Insurance," and "Management Organization for Postal Savings and Postal Life Insurance" after October 1 2007 are included.

Within "Banks" in 2008, "Japan Post Bank" is included, and within "Insurance Companies," "Japan Post Insurance" is included.

Within "Japan Post" in 2008, only the number of reports calculated from the "Management Organization for Postal Savings and Postal Life Insurance" are included.

## 3 Number of Reports by Branch Locations of specified business operators

Locations of branches (stores) of specified business operators that filed suspicious transaction reports are shown in figure 4-3 and table 4-4. Tokyo has the largest amount, or 87,044 cases, 37.0% of all reports, followed by Osaka Prefecture with 21,037 cases (8.9%), and Aichi Prefecture with 15,447 cases (6.6%).

The top 10 prefectures are concentrated in large cities (notwithstanding, the ranking is different from 2007's, the prefectures of the top 10 are the same as 2007's). This is presumably due to the fact that
the population, scale of economy and the number of transactions are larger.

The number of reports in 2008 from all around Japan increased 77,219 cases (48.9%) from the year before. In 43 prefectures reports increased from the year before. In particular, in Miyazaki Prefecture 2.4 times more reports than 2007 were filed. Reports in Tottori, Tokyo, Akita and Ishikawa Prefecture also 1.8 times more report than in 2007. This shows that both city banks and local financial institutions are improving AML measures.

Figure4-3 Number of Suspicious Transaction Reports by Prefectures, in 2007

Table4-3 Number of Suspicious Transaction Reports by Prefectures

Prefecture	Number of reports in 2007	Number of reports in 2008	Increase/decrease between 2007 and 2008 (number of reports)	Increase/decrease between 2007 and 2008 (%)
Tokyo	44,817	87,044	42,227	94.2%
Osaka	16,097	21,037	4,940	30.7%
Aichi	8,708	15,447	6,739	77.4%
Kanagawa	10,007	12,917	2,910	29.1%
Chiba	7,764	11,210	3,446	44.4%
Hokkaido	8,489	8,936	447	5.3%
Saitama	7,248	8,924	1,676	23.1%
Shizuoka	3,840	6,438	2,598	67.7%
Fukuoka	3,916	5,380	1,464	37.4%
Hyogo	4,335	5,150	815	18.8%
Total of top 10 prefectures	115,221	182,483	67,262	58.4%
Total of other 37 prefectures	42,820	52,777	9,957	23.3%
Total	158,041	235,260	77,219	48.9%

Note: The number of offices of financial institution was taken from "Statistical Survey of Business and Companies in 2006-Total Number of Businesses by Industry (Sub-category) of Prefectural Statistics," Ministry of Internal Affairs and Communications. This does not exactly correspond to the number of offices subject to STR requirement.
## Section3 Use of Suspicious Transaction Reports

## Paragraph1 Dissemination to Investigative Authorities

JAFIC provides investigative authorities with STRs reported by specified business operators that it judged to be conducive to the investigation of money laundering and predicate offences. Investigative authorities are Prefectural Police, Public Prosecutors Office, Narcotics Control Department, Japan Coast Guard, and Customs and Securities and Exchange Surveillance Commission.

In 2008, 146,330 reports were disseminated to investigative authorities, an increase of 47,701 cases (48.4%) compared to the previous year (See figure 4-2).

The number of disseminated reports amount to 62.2 % of all the STRs and this ratio has stayed almost the same over the past several years.

## Paragraph2 Outlook of How STRs are Used

The number of cases cleared by prefectural police that were initiated with STRs is increasing each year, after the enforcement of Organized Crimes Punishment Law, with 175 cases in 2008.

Table 4-4 shows the numbers categorized by the type of crime, and fraud has the largest number making up 75.4%.

Table4-4 Number of cases cleared that started with Suspicious Transaction Reports

Year Crime	2000	2001	2002	2003	2004	2005	2006	2007	2008	Total
Fraud	2	3	2	4	6	14	34	81 (6)	132 (2)	278 (8)
Violation of Money-Lending Business Law and Law Concerning Receiving of Capital	1	3	3	1	2	3 (1)	12(6)	25 (7)
Forgery of documents	2	1	2	1	2	2	10
Drug offenses	1	2	1	4
Gambling	1	1	2
Other	1	7	10	5	2	2	14	12 (2)	28 (1)	81 (3)
Total	3	14	16	12	13	18	50	99 (9)	175 (9)	400 (18)

Note 1: This is the number held by National Police Agency

Note 2: The number in parentheses ( ) represents the number of suspected money laundering cases which led to arrest.

Note 3: Drug-related crimes are in violation of each the Special Drug Act, Stimulants Control Act, Canaanis Control Law, and/or Narcotics and Psychotropics Control Act.
With regard to the number of STRs utilized for the investigation by prefectural police, 668 investigations were initiated with STRs. Other than these STRs, 44,199 STRs were utilized for other investigation not initiated with STRs.

In the investigations not initiated with STRs, many STRs are used for criminal investigation that started from a different source, for further crimes, for locating criminal proceeds. In addition, they are used as essential intelligence to promote anti-organized crimes measures, such as for revealing sources of income or utilizing funds of Boryokudan.

The STRs being used for criminal investigation that initiated with the STRs but still under investigation are counted as the STRs being not initiated with STRs.

Table 4-5 Number of STRs used in 2008

Number of STRs used for investigation of cases cleared that initiated with information contained therein	668
Number of STRs used for investigation of cases other than above mentioned	44,199

Note: In the number of STRs used for investigation of cases cleared that initiated with STRs, the number of STRs used, when the case is cleared, is added up.

JAFIC tries to obtain a realistic view of the movement of funds of the antisocial syndicates such as Boryokudan by comprehensive analysis of information contained in the STRs of customers, by matching them with other STRs from the same customers that were reported in the past; information accumulated to measure for organized crime, as well as publicly available information.

These analyses have revealed that antisocial syndicate makes use of Boryokudan affiliated companies, investment partnerships and other kind of corporate vehicles and utilizes their funds in various ways and transfers a large amount of funds overseas.

Although it can be assumed that the resources of a large part of the funds handled by antisocial syndicates are sometimes from criminal proceeds, there are many cases that their relationship with particular predicate offences is obscured because various fund activities make its source unclear and utilized in various ways.

As recent cases of arrests typically show, antisocial syndicates often use affiliated companies as cover, feign normal transactions that hide any connection with Boryokudan, receive cooperation from others who have various information and specialized knowledge, and thus use their funds. This is one of the main factors which make the fund-raising activity by antisocial syndicates opaque.

Therefore, in order for the actual conditions of fund-raising activities to become more transparent, JAFIC is convinced that it is important to continue to monitor and trace the movement of funds of antisocial forces, and to enhance the control of illegal activities committed in the course of fund-raising activities through the utilization of the analysis of STRs as well as a close cooperation with investigative authorities, including Customs, Securities and Exchange Surveillance Commission and foreign FIUs.