now subject to reporting as suspicious transactions.

Also, to implement the obligations of customer identification and record keeping required under the said Convention and the 40 Recommendations, “the Act on Customer Identification by Financial Institutions (Customer Identification Act)” was adopted (enforced in Jan. 2003). Because of frequent abuse of bank accounts under other or fictitious names for offenses such as Billing Fraud, the Customer Identification Act was amended in December 2004 to provide sanctions to transfer (both receiving/assignment) of passbooks.

## 4 Development of “the Act on Prevention of Transfer of Criminal Proceeds”

In response to the extension of the scope of businesses subject to customer due diligence (CDD) and other obligations to include DNFBPs in 2003, "the Headquarters for Promotion of Measures Against Transnational Organized Crime and International Terrorism", with the Chief Cabinet Secretary as head thereof, in December 2004, publicized "the Action Plan for Prevention of Terrorism" including consideration of the implementation of the re-revised The 40 Recommendations. In November 2005, the abovementioned Headquarters decided that the National Police Agency would draft the bill for implementation of the re-revised Recommendations and that the Flu function would be transferred from the Financial Services Agency to the National Public Safety Commission. In addition, the competent administrative authorities would provide guidance and supervision to the relevant business sectors over STRs regime.

The National Police Agency drafted the bill, in cooperation with relevant ministries and agencies, quoting all references of Customer Identification Act and a portion of the Act on Punishment of Organized Crimes, and submitted it to the 166th National Diet session in February 2007. "The Act on Prevention of Transfer of Criminal Proceeds" was then adopted in March of that year. Partial enforcement of the Act stipulating the transfer of the Flu was carried out in April of the same year, while the expansion of specified business operators subject to the CDD obligation and other remaining provisions were enforced in March, 2008. In April 2011, upon consideration of discussions on recommendations made under the 3rd FATF Mutual Evaluation of Japan in 2008, and in light of damages caused by billing fraud in Japan, the following amendments were made to the Act on Prevention of Transfer of Criminal Proceeds: additional points to verify on transactions of specified business operators; addition of call forwarding service providers to the list of specified business operators; addition of measures for accurate verification at the time of transactions; and strengthening punishments on illicit transfer of passbooks, etc. The amended Act was fully enforced in April 2013.

Following the G8 Action Plan Principles agreed at the G8 Lough Erne Summit in 2013, Japan also expressed its strong commitment to it by announcing the Japan Action Plan in June 2013, according to which necessary actions including the national risk assessment of ML/TF should be undertaken.

Moreover, in November 2014, based on debates about institutional reforms intended to achieve the levels required by the FATF recommendations concerning customer due diligence, which were pointed out by the above Mutual Evaluation Report of Japan and FATF