Silviase/jgov_v1.4_full_ann huggingface dataset:
Figure 2-2 Overview of the Act on Prevention of Transfer of Criminal Proceeds

※ 1 Amongst financial institutions etc., those operators involved in foreign exchange are required to provide notification on money remitters in addition to the above.

$ ^{*} $ 2 Professions such as judicial scriveners, certified administrative procedure specialists, certified public accountants, and certified tax accountants are required to verify the information in ①only.

$ ^{*} $ 3 The Japan Federation of Bar Associations defines, in its bylaws, measures to ensure accurate verification on transactions, and preparation/preservation of verification records and transaction records by lawyers. These rules are based on examples of judicial scriveners and other professions contained in the Act on Prevention of Transfer of Criminal Proceeds.

## Specified business operators

○Financial institutions (items 1 through 37):

Bank; Shinkin bank; Federation of Shinkin banks; Labor bank; Federation of labor banks; Credit cooperative; Federation of credit cooperatives; Agricultural cooperative; Federation of agricultural cooperatives; Fishery cooperative; Federation of fishery cooperatives; Fishery processing cooperative; Federation of fishery processing cooperatives: Norinchukin Bank; Shokochukin Bank; Development Bank of Japan; Insurance company; Foreign insurance company, etc.; Small-claims/short term insurance business operator; Federation of fishery cooperatives for mutual aid; Financial instruments business; Securities finance company; Specially permitted business notifying person; Trust company; Self-trusteed company; Real estate specified joint enterprise operator or special business operator; Mutual loan company; Money lender; Call money market broker; Fund transfer company; Virtual currency exchange service provider; Futures commission
merchant; Book-entry transfer institution; Account management institution; Electronic receivables recording organization; Management Organization for Postal Savings and Postal Life Insurance; Currency exchanging operator

○Financial leasing operator (item 38)

○Credit card operator (item 39)

○Real estate agents (item 40)

○Dealers in precious metals and stones (item 41)

○Postal receiving service providers, telephone receiving service, providers and telephone forwarding service providers (item 42)

○Lawyer or legal profession corporation (item 43)

○Judicial scrivener or judicial scrivener corporation (item 44)

○Certified administrative procedures specialists or administrative scrivener corporation (item 45)

○Certified public accountant or audit firm (item 46)

○Certified public tax accountants or certified tax accountant corporation (item 47)

## 4 Responsibilities of the National Public Safety Commission and FIU (Article 3)

The Act provides that the National Public Safety Commission has responsibilities to endeavor 1) to enhance public awareness on the importance of the prevention of the transfer of criminal proceeds in order to ensure specified business operators conduct appropriate measures in performing CDD, and to provide them with support including the provision of information on the modus operandi; regarding the transfer of criminal proceeds, and 2) to promptly and appropriately collect, arrange and analyze information on criminal proceeds including information on suspicious transactions reported by specified business operators so that such information can be effectively utilized in the investigation into criminal cases and related international cooperation.

In addition, the National Public Safety Commission is required each year to investigate and analyze the status of transfer of criminal proceeds, including modus operandi related to the transfer, and compile and publish NRA, which describes the investigation and analysis results, including the risk level of transfer of criminal proceeds by type of transaction conducted by specified business operators and other business operators.

## 5 Measures by Specified Business Operators

The measures which specified business operators (excluding lawyers; the same shall apply in this section except for 5 (7) and Table 2-1) are obligated to implement and the measures related to identification by lawyers are described in (1) to (7) and Table 2-1 below.

## (1) Verification at the time of transactions (Article 4)

In conducting specified transactions described in Table 2-2 with customers, specified business operators are required to verify their identification data (the name, domicile and birth date), the purpose and intended nature of the transaction, occupation (identification data, including the name and location of the headquarters or main office, the pur-
pose and intended nature of the transaction, type of business and the beneficial owner in cases where the customer is a legal person) by asking for their identification documents such as driver's license. However, in cases where the specified business operator is either a judicial scrivener, administrative scrivener, certified public accountant or tax account; hereinafter referred to as a "judicial scrivener, etc."), it is sufficient to verify the customers' identification data alone.

When a specified transaction is conducted with a customer's agency or a representative of the customer's corporation, identification data of said agency or representative must also be verified.

Regarding transactions that have a high risk of being related to ML/TF, where there is a suspicion of pretending to be a customer, etc. on conducting specified business affairs which does not fall under specified transactions, specified business operators are required to verify items related to verification at the time of transactions with a more enhanced method than usual. Moreover, in cases where the transaction involves the transfer of assets worth more than ¥2 million, specified business operators other than judicial scriveners are required to verify information concerning customers' source of wealth and source of funds.

(For details, see the Japan Financial Intelligence Center (JAFIC) Website)

Methods of verification at the time of transactions are as shown in Figure 2-3.

## (2) Preparation and preservation of verification records (Article 6)

Specified business operators are required to prepare and keep records of verification records collected at the time of transaction, as well as measures taken for verification of the customer at the time of the transaction, for seven years from the day when the transactions were completed or terminated;

### (3) Preparation and preservation of transaction records etc. (Article 7)

Specified business operators are required to prepare and keep the record of the date and contents of transactions concerned for seven years;

## (4) Reporting of suspicious transactions (Article 8)

Specified business operators are required to file an STR with the competent administrative authority in cases where an asset received through their business operation is suspected of being criminal proceeds, or where the customer is suspected of engaging in money laundering with regard to the specified business affairs (excluding judicial scriveners, etc.).

Determination as to whether or not a suspicious transaction report should be submitted will be made under a method $ ^{(Note)} $ prescribed by the ordinance of the competent ministries while taking account of the contents of NRA, in addition to the results of verification at the time of transactions, patterns and natures of transactions and other circumstances.

(Note) Methods, etc. of verification whether there is a suspicion of ML through comparison of the nature of transactions with those of usual transactions, comparison with past transactions with the same customer, and checking of the consistency with the content verified at the time of transactions, etc.
(5) Enhanced verification at the time of the conclusion of correspondence contracts (Article 9)

When concluding a correspondent banking contract $ ^{1} $ under which exchange transactions with an exchange business operator located abroad are conducted continuously or repeatedly, specified business operators who conduct exchange transactions on a regular basis are required to verify that the foreign exchange business operator located abroad has developed a system necessary for appropriately implementing a measure equivalent to verification at the time of transactions.

## (6) Notification pertaining to foreign exchange transactions (Article 10)

In making wire transfers to other countries, specified business operators conducting exchange transactions on a regular basis are required to notify the receiving exchange transaction business operator located abroad of certain items, such as the customer's name and account number.

(7) Measures to ensure thorough and effective CDD measures to be taken (Article 11)

Specified business operators are required to endeavor to take measures to keep information up-to-date concerning matters for which verification at the time of transactions has been conducted, formulate rules concerning the implementation of such measures as verification at the time of transactions, etc. and appoint a person in charge of supervising business affairs, etc.

## (8) Measures for verification of customer identification data by lawyers (Article 12)

It is established by special provision, that lawyers shall conduct measures relevant to those described in (1) through (3) and (7) above based on The Rule of the Japan Federation of Bar Associations in line with cases of judicial scrivener.

The CDD regime in which measures as described in (1) through (3) above are undertaken is intended to make the financial or other services less attractive to those who try to use them for money laundering or any other illicit purposes and to ensure traceability of illicit funds. Meanwhile, the STR regime as described in (4) in which reported information will be used for investigations into money laundering and/or predicate offenses, is also intended to protect the financial system from misuse to ensure its soundness. Measures (as noted in (7)) are intended to ensure accuracy of the customer identification process during transactions, making the process more efficient. These measures are expected to help specified business operators to be aware of ML/TF risks more comprehensively and efficiently.

The purpose of notification pertaining to enhanced verification at the time of the conclusion of correspondence contracts and foreign exchange transactions described in (5) and (6) is to make the financial or other services less attractive to those who try to use them for international money laundering and also to ensure international traceability of illicit funds.
Table 2-1 【Measures that Must be Implemented by Specified Business Operators under the Act】

Mandatory measures	Verification at the time of transaction [Article 4]	Preparation and preservation of verification records [Article 6]	Preparation and preservation of transaction records etc. [Article 7]	Reporting of suspicious transactions [Article 8]	Enhanced verification at the time of the conclusion of correspondence contracts [Article 9]	Notification pertaining to foreign exchange transactions [Article 10]	Measures to ensure thorough and effective CDD measures to be taken [Article 11]
Financial institutions (items 1 through 37)	○	○	○	○	○	○	○
Financial leasing operators (item 38)	(Limited to those who conduct exchange transactions on a regular basis)	(Limited to those who conduct exchange transactions on a regular basis)
Credit card operators (item 39)
Real estate agents (item 40)
Dealers in precious metals and stones (item 41)
Postal receiving service providers (item 42)
Telephone receiving service providers (item 42)
Telephone forwarding service providers (item 42)
Judicial scriveners (item 44)	○ (Only identification data)	×	×	×
Certified administrative procedures specialists (item 45)
Certified public accountants (item 46)
Certified public tax accountants (item 47)
Lawyers (item 43)	As prescribed by the bylaws set by the Japan Federation of Bar Associations based on examples of judicial scriveners, etc. (Article 12).	As prescribed by the bylaws set by the Japan Federation of Bar Associations based on examples of judicial scriveners, etc. (Article 12)
Figure 2-3 Methods of Verification at the Time of Transaction

For transactions that carry a high risk of money laundering, verification of transaction purpose and intended nature must be carried out with stricter criteria. And, for transactions of over $ \backslash2 $ million, verifications of assets and income are also required.

## 6 Dissemination of STR Information (Articles 13 and 14)

In order to make use of STR information for investigations conducted domestically or internationally JAFIC may disseminate such information to public prosecutors, assistant officers to prosecutors, judicial police officials (police officers, narcotics control agents and coast guards), customs officers and personnel of the Securities and Exchange Surveillance Commission (SESC) and other related investigators. JAFIC would also disclose STR information to foreign FIUs concerned based on the agreed terms of conditions.

## 7 Supervision (Articles 15 to 19, 25, 26 and 31)

The Act provides for a supervisory regime undertaken by competent administrative authorities in order to ensure the compliance of specified business operators. For this purpose, the supervising authorities would exercise a supervisory power by conducting on or off-sight inspection of the regulated businesses or issuing a rectification order for non-compliance as necessary.
Persons who have failed to submit reports or materials, or submit false reports or materials, or who refused on-site inspections, shall be punished with imprisonment with labor for not more than one year or a fine of not more than three million yen or both. A person who violates rectification order shall be punished with imprisonment with labor for not more than two years or a fine of not more than three million yen or both.

Importantly, to complement the supervision by the regulating authorities, JAFIC is authorized to advise the supervising authorities over whether appropriate actions should be taken against a specific specified business operator based on the fact of JAFIC detecting non-compliance. For the purpose of this duty, it is also granted a power of inspection of a specified business operator in doubt.

## 8 Penal Provisions regarding Receipt/Delivery/Provision of Deposit/Savings Passbooks and Exchange Transaction Cards (Articles 28 to 30)

For years it had been a significant challenge to take actions against traded deposit/savings passbooks, ATM cards or Exchange Transaction Cards which were exposed to exploitation for the purpose of money laundering or any proceed-related crimes. In order to prevent this, the Act prohibits anyone to give or take a deposit/savings passbook as a subject of transaction no matter whether or not it is for value with a penalty of imprisonment with labor for not more than one year or a fine of not more than one million yen or both. Specifically, when such transaction is conducted as a business of any parties concerned, the penalty would be aggravated to imprisonment with work for not more than three years or a fine of not more than five million yen or both.

Furthermore, it is also prohibited that anyone invites or solicits another party to assign, deliver or provide a deposit/savings passbook no matter whether or not it is for value, resulting in a punishment of imprisonment with labor for not more than one year or a fine of not more than one million yen or both.

## Section 2 Outline of the Act on Punishment of Organized Crimes and the Anti-Drug Special Provisions Law

## Paragraph 1 The Act on Punishment of Organized Crimes

The Act on Punishment of Organized Crimes was enacted in response to the introduction of the requirement for expanding the scope of predicate offenses of money laundering to include serious crimes due to the revision of the FATF 40 Recommendations of 1996 and the international agreement reached at the 1998 Birmingham Summit on the establishment of an Flu, and it was put into force in February 2000. In terms of criminal proceeds regulations, this law has expanded the scope of predicate offenses of concealment of criminal proceeds, etc. to include certain serious crimes. It also provides for the confiscation and collection of equivalent value of criminal proceeds, etc. Provisions concerning Flu were provided in the Act on Punishment of Organized Crimes before the enforcement of the Act on Prevention of
Transfer of Criminal Proceeds.

## 1 Criminalization of Money Laundering (Articles 9 through 11)

## (1) Illegal corporate control management (Article 9)

The Act on Punishment of Organized Crimes criminalizes the act of changing executives, etc. of a legal person as a means to control its business management by using illicit proceeds (proceeds from certain crimes, proceeds from certain drug-related criminal proceeds, assets acquired through ownership or disposition of those proceeds and assets including such assets and other assets).

## (2) Concealment of criminal proceeds (Article 10)

The following act are criminalized by this article: (i) The Act of disguising facts with respect to acquisition or disposition of criminal proceeds, (ii) the act of concealing criminal proceeds, (iii) the act of disguising facts with respect to the source of criminal proceeds.

## (3) Receipt of criminal proceeds (Article 11)

The act of knowingly receiving criminal proceeds is criminalized by this article.

## 2 Confiscation, Collection of Equivalent Value and Securance Measures (Articles 13 through 16, 22, 23, 42 and 43)

The system of confiscation and collection of equivalent value provided in the Act on Punishment of Organized Crimes is left to the discretion of the court in principle, like the system provided in the Penal Code. However, it has been strengthened compared with the system of confiscation and collection of equivalent value provided in the Penal Code, in that the scope of items subject to the system has been expanded to include monetary claims and assets obtained as the fruit of criminal proceeds and that securance measures have been established.

Regarding the restraining order for confiscation, one of the securance measures, the court may prohibit — either upon the request of a prosecutor or at based on its own authority — the disposition of assets that should be confiscated in a prosecuted case in order to prevent the disposition before a court judgment is made. In cases where there is the possibility that an offender who acquired assets that are equivalent to criminal proceeds will detect the start of investigation and dispose of the assets, the judge may prohibit the disposition of the assets upon the request of judicial police officers, etc. even before institution of prosecution for a period of 30 days or less (the period may be renewed upon the request of the prosecutor). Regarding the restraining order for collection of equivalent value, there is a similar provision to that regarding the restraining order for confiscation. (However, only the prosecutor can request a temporary restraining order before institution of prosecution.)

## Paragraph 2 Anti-Drug Special Provisions Law

The Anti-Drug Special Provisions Law was enacted for the purpose of blocking cycles of illegal proceeds derived from drug crimes, directly triggered by the UN New Narcotics Conven-
tion adopted in 1988 and the FATF "40 Recommendations" compiled in 1990, and enforced in July 1992. This law contains two items with regard to measures against drug crime proceeds as below. In terms of regulation on drug-related criminal proceeds regulations, this law provides for the following two matters:

## 1 Punishment of Money Laundering (Articles 6 and 7)

The Anti-Drug Special Provisions Law criminalize the acts of disguising facts with respect to the acquisition or disposition of drug-related criminal proceeds and concealing and receiving such proceeds as examples of money laundering.

## 2 Confiscation, Collection of Equivalent Value and Securance Measures (Articles 11 through 13, 19 and 20)

Drug-related criminal proceeds shall be confiscated or the equivalent value thereto shall be collected. The system of confiscation and collection of equivalent value provided in this law is mandatory in principle whereas the system provided in the Act on Punishment of Organized Crimes is discretionary.

Regarding the restraining orders for confiscation and collection of equivalent value, there are provisions similar to those under the Act on Punishment of Organized Crimes.

## Section 3 Recent Legislative Changes

From the AML/CFT perspective, the National Police Agency has made necessary amendments as appropriate to the Act on Prevention of Transfer of Criminal Proceeds and its subordinate decrees in order to adapt to the current AML/CFT environment.

## 1 Amendment of the Act on Prevention of Transfer of Criminal Proceeds in Response to the Emergence of Virtual Currencies

## (1) Backgrounds to the amendment

The Leaders' Declaration of the Elmau G7 Summit in June 2015 and the FATF Guidance, etc. demand the inclusion of transactions using bitcoins or other virtual currencies in the subjects of the regulations on money laundering, etc. in light of the characteristics of virtual currencies such as a high degree of anonymity and fastness and easiness of funds transfers.

In Japan, as well, there have been virtual currency-related crimes, such as drug smuggling cases wherein virtual currencies were used as means for payment, and the suspects were arrested.

Under such circumstances, as a result of deliberations with relevant ministries and agencies, including the Financial Services Agency, regulations on virtual currency exchange service providers, which provide for the registration system thereof and other particulars, were introduced through the amended Payment Services Act in March 2016. Additionally, the Bill to Partially Amend the Banking Act, etc. to Address Advances in In-