Silviase/jgov_v1.4_full_ann huggingface dataset:
## Section3 Information Exchange with Foreign FIUs

## Paragraph1 Establishment of the Framework for Exchange of Information

It is necessary to exchange information on suspicious transactions with foreign FIUs timely in order to detect money laundering and terrorist financing by appropriately tracing criminal proceeds or terrorist financing transferred across borders.

On the other hand, Article 12 of the Act on Prevention of Transfer of Criminal Proceeds stipulates that JAFIC may disseminate information on suspicious transactions to foreign FIU on condition that there is a framework governing how the foreign FIU should use the disseminated information.

The framework as above mentioned is called MOU

Setting the framework for information exchange with India FIU

(Memorandum of Understanding) in the field of the international exchange for FIUs such as the Egmont Group. JAFIC has been coping with the negotiations for setting the frameworks for information exchange with numerous foreign FIUs in order to constructively exchange necessary information with them.

From its establishment of April 2007 till the end of 2009, JAFIC has set the frameworks for information exchange with the FIUs of 20 jurisdictions. Moreover, in 2010, JAFIC has newly established frameworks with 6 jurisdictions (Turkey, Mexico, Luxembourg, Chile, Finland, and India).

Table 5-1 [26 jurisdictions which has set the Frameworks for Information Exchange between FIUs, which Japan]

Year of Agreement	Jurisdictions
2007	Hong Kong, Thailand, Malaysia, Belgium, Australia, U.S., Singapore, Canada, Indonesia, U.K., Brazil, Philippine
2008	Switzerland, Italy, Portugal, South Korea, Romania
2009	Paraguay, France, Qatar
2010	Turkey, Mexico, Luxembourg, Chile, Finland, India

## Paragraph2 Status of Information Exchange with Foreign FlUs

JAFIC exchanges suspicious transaction information with foreign FIUs in a positive and expeditious manner.

The number of the information exchange cases with foreign FlUs during 2010 was 162 cases as shown in Table 5-2. JAFIC has been strengthening the systems of analysis and as a result, requests to foreign FlUs are increasing.

In 2010 regarding strange or unreasonable money transfers to and from foreign countries, which analyses on information of suspicious transaction have revealed, JAFIC, for further analysis, made 78 requests for further analysis to relevant foreign FIUs for information, such as, the flow of funds transferred out of Japan, the source of remittance from abroad, etc.

JAFIC successfully received of requested information, as well as lots of useful information such as
foreign entities' involvement, etc., from relevant foreign FIUs.

Fig.5-2 Exchange of STRs with Foreign FLUs

2007	2008	2009	2010
Number of requests for information from foreign FIUs to JAFIC	33	60	47	54
Number of requests for information from JAFIC to foreign FIUs	16	30	51	78
Number of cases where foreign FIUs spontaneously provided JAFIC with information	10	42	18	23
Number of cases where JAFIC spontaneously provided foreign FIUs with information	0	3	6	7
Total	59	135	122	162

In order to facilitate exchange of information, JAFIC has actively carried out various activities such as learning how foreign FIUs analyze information and how foreign FIUs analyze information utilize the funds information, etc. by foreign investigation agencies. JAFIC has also conducted meaningful discussions, etc., for the activation of future exchange of information, by visiting FIUs of jurisdictions where there is a need for close coordination especially from the viewpoint of countermeasures against money laundering and terrorism financing, as well as FIUs of other jurisdictions where there still is no framework for information exchange.

Meanwhile, in 2010 JAFIC provided foreign FIUs with information on suspicious transactions which, it finds, will contribute to the performance of their duties in 17 cases.

The following achievements were made in 2010;

February Discussion with India FIU (New Delhi)

March Discussion with China FIU (Beijing)

Information Exchange with Philippine FIU (Manila)

May Information Exchange with Korea FIU (Tokyo Discussion with Nigeria FIU (Abuja) Discussion with Spain FIU (Madrid)

July Discussion with Cambodia FIU (Phnum Penh)

September Participation in APEC seminar (Cairns)

November Information Exchange with Canada FIU (Tokyo)

Individual information exchange with Thai FIU, at the East Asia Regional Organized Crime Countermeasure Conference (Tokyo)

Note: locations of the meetings are in parentheses ( )
Discussion with Spain Flu

Discussion with Vietnam Flu

Section4 FATF Mutual Evaluation of Japan

## Paragraph1 Implementation of the Third FATF Mutual Evaluation of Japan

The FATF Mutual Evaluation of Japan was conducted three times; and the third round, the most recent one, was conducted from late 2007 to late 2008 with JAFIC and related government agencies responding. The main process and procedure of the FATF Mutual Evaluation of assessed countries are: 1. response to the Mutual Evaluation Questionnaire (MEQ), 2. On-site visit to directly confirm the actual status by assessors, 3. discussion at the FATF Plenary meeting. Japan provided the response to the MEQ in January 2008, and underwent on-site visit in Tokyo and Osaka in March of the same year. In October 2008, at the Plenary meeting in Brazil, the third round of Mutual Evaluations of Japan was concluded. Since the results of every evaluation are to be published, the results of the evaluation of Japan are also published on the FATF website (http://www.fatf-gafi.org/) and the Ministry of Finance website (http://www.mof.go.jp/jouhou/kokkin/fatfhoudou_201030.htm).

## Paragraph2 Outline of the Mutual Evaluation Results

For each of 49 Recommendations there are four possible levels of compliance; namely, C (Compliant), LC (Largely Compliant), PC (Partially Compliant) and NC (Non-Compliant). As the results of Japan are shown in Table 5-3, C was received for 4 recommendations, LC for 19, PC for 15, and NC for 10 (Furthermore, Japan has one recommendation that did not apply (N/A)).

As for the recommendation regarding the FIU (Recommendation 26), the need to further strengthen personnel was pointed out, while the transfer of FIU functions from the Financial Services Agency to the National Public Safety Commission / the National Police Agency was positively evaluated. (Rating: LC). As for the recommendation regarding customer due diligence by financial institutions (Recommendation 5), assessors pointed out that the measures such as certification of beneficial owner and purpose of transaction, and ongoing customer due diligence, should be directly regulated by law or the like, and the additional customer identification methods should be introduced in case of identifying a customer without a photo ID (Rating: NC).

## Paragraph3 Follow-up of the Mutual Evaluation Results

## 1 Follow-up Procedures

In the context of the procedures regulated by FATF, no later than 2 years after the discussion of their
MERs, assessed countries must provide an update to the FATF Secretariat describing the general statistics and new measures that have been adopted and implemented to deal with the identified deficiencies in relation to any of the FATF Recommendations that are rated PC or NC. Further updates would be provided every 2 years.

Also, Regular Follow-up procedure will apply to assessed countries where any of six "core" Recommendations (Recommendation 1, 5, 10, 13 or Special Recommendation II or IV) are rated either PC or NC. The normal first step in the process would be that 2 years after the MERs are discussed, the assessed countries would report back to the Plenary and provide information on the actions it has or is taking to address the factors / deficiencies underlying any of the FATF Recommendations that are rated PC or NC. Where the Plenary agrees that the assessed country has implemented 16 Recommendations (core Recommendations, Recommendation 3, 4, 23, 26, 35, 36, 40, Special Recommendation I, III, and V) at a level essentially equivalent to a C or LC, the country will be removed from the follow-up process. FATF members are encouraged to make necessary improvements and to seek removal from the follow-up process within three years after the adoption of the MERs.

## 2 Report on Improvement (1st Report) and Future Plans

Regular Follow up procedures apply to Japan under Recommendation 5 rated NC and Special Recommendation II rated PC. Since the Mutual Evaluation, Japan has made repeated consideration for the improvement of deficiencies identified in the Mutual Evaluation, at "the Related Ministry Liaison Conference regarding Implementation of FATF Recommendations," etc.

Especially, in order to assist in considering how customer due diligence in Japan should function to contribute to countermeasures against money laundering, the National Public Safety Commission / the National Police Agency, in cooperation with related ministries and agencies, established the "Council on customer due diligence measures by specified business operators for anti-money laundering" with academic experts and practitioners professionals as its committee. Results of this Council were summarized in a report in July 2010. Since then, the NPA has reflected on recommendations provided in the report, and such considerations on how customer due diligence by specific business operators should be carried out have progressed toward legal amendment.

Japan reported on the actions it has taken, or is taking, to address the deficiencies underlying Recommendations rated PC and NC in 2010 to the Plenary Meeting held in Paris in October 2010, two years after the publication of the Mutual Evaluation. The next progress report will be made in October 2011.
Table 5-3 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 essential to understand the scale and modus operandi of actual money laundering activities. JAFIC understands them through cleared cases related to money laundering as well as STRs. Section 1 of this Chapter describes actual conditions based on the cleared cases of money laundering. As explained in Chapter 2, money laundering defined in Japan consists of control of management of enterprises of legal persons and other entities through illicit proceeds (Article 9), concealment of criminal proceeds etc. (Article 10) and receipt of criminal proceeds etc. (Article 11) each stipulated in the Act on the Punishment of Organized Crimes, and also concealment of drug-related criminal proceeds etc. (Article 6) and receipt of drug-related criminal proceeds etc. (Article 7) each stipulated in the Anti-Drug Special Provisions Law. They include typical money laundering activities such as transferring criminal proceeds to a place to prevent from being traced and depositing criminal proceeds in a bank account under the name of another person, although all the activities to transfer criminal proceeds are not yet covered.

It is better understood that the number of cleared cases of money laundering shows the AML achievement in Japan. The amounts of confiscation of criminal proceeds following the cleared cases also indicate an important element of the AML achievement. Section 2 of this chapter describes deprivation of criminal proceeds and the system of a "Temporary Restraining Order for Confiscation before Institution of Prosecution" to ensure this end.

## Section 1 Cleared Cases of Money Laundering

## Paragraph 1 Cleared Cases of Money Laundering under the Act on the Punishment of Organized Crimes

## 1 Number of Cleared Cases

There were 205 cases (21 less than the previous year) cleared of money laundering under the Act on the Punishment of Organized Crimes in 2010, including 1 case of managing enterprises through illicit proceeds (1 more than the previous year), 139 cases of concealment of criminal proceeds etc. (note) (33 less than the previous year), and 65 cases of receipt of criminal proceeds etc. (11 more than the previous year). The total number of the cleared cases after the enforcement in 2000 of the Act is 1,186.

(note) Criminal proceeds etc. mean proceeds from criminal activities, assets deriving from criminal proceeds, or assets mixed with other assets.
Table 6-1 Number of cleared cases of Money Laundering under the Act on the Punishment of Organized Crime

2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
Management Control through Illicit Proceeds (Article 9)	0	0	0	0	0	1 (0)	0	1 (1)	0	1 (0)
Concealment of Criminal Proceeds, etc. (Article 10)	10 (5)	19 (9)	45 (25)	50 (29)	65 (21)	91 (18)	137 (35)	134 (41)	172 (49)	139 (46)
Receipt of Criminal Proceeds, etc. (Article 11)	2 (2)	9 (7)	11 (10)	15 (11)	42 (27)	42 (35)	40 (25)	38 (21)	54 (41)	65 (44)
Total	12 (7)	28 (16)	56 (35)	65 (40)	107 (48)	134 (53)	177 (60)	173 (63)	226 (90)	205 (90)

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

Note 2: Each number in brackets represents the number of cases conducted by Boryokudan members etc.

In 2010, the four major categories of the predicate offences of money laundering under the Act on the Punishment of Organized Crimes were fraud such as "Furikome Fraud" (52 cases), "loan sharking offences" (46 cases) such as violations of the Investment Law and the Money Lending Business Law, theft (27 cases) and distribution of obscene objects etc. (22 cases) such as indecent DVDs and child pornography. Following the trends in recent years, fraud and "loan sharking offences" were still in the top 2 categories, and the total number of cases of these two top categories was 98, representing approximately 50% of all cases cleared of money laundering. This shows that the major source of criminal proceeds was these two crimes. (Regarding the number of cleared cases of money laundering under the Anti-Drug Special Provisions Law, please refer to Paragraph 2 of this section).

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

## (1) Examples of Concealment of Criminal Proceeds

In 2010, it was found that the suspects tried to evade investigation of law enforcement authorities by using various methods as observed in the following cases; a case where the suspect impersonating a son or other relative tricked the victim into depositing money in the bank account under another person's name telling the false fact that the money was needed for consolation (Case 1), a case where the suspect made customers remit payment to the bank account under another person's name by selling indecent DVDs and other goods at the website (Case 2), a case where stolen items were auctioned on the Internet while the suspect impersonated another person (Case 3), a case where the suspect defrauded the victim by demanding the return of correspondence course subsidies and made the victim send cash to the private mail box under a fictitious group's name (Case 4), and a case where stolen items were sold to a pawn broker while suspect impersonated another person.

Especially, with respect to in the cases such as "Furikome Fraud", "loan sharking offences" and selling of pornographic DVDs, etc., there is a trend with respect to that a suspect tries to make a victim deposit money in a bank account in another person's name, and it is still the main infrastructure for money laundering in non-face-to-face crimes like these.
#### [Cases 1] (Concealment of criminal proceeds etc. obtained from “Furikome Frauds” (“Ore-Ore” fraud) (note) by impersonating Victim’s son etc.)

An unemployed man and others forming a fraud group made phone calls to many victims on several occasions while posing as their relatives, such as a son, falsely claiming that he injured a woman on a date and needs consolation money etc. The suspects defrauded the victims of an approximate total of 75 million yen by making them believe the above false stories and then transfer money to a bank account under another person's name managed by the suspects. The suspects were arrested for violation of the Act on the Punishment of Organized Crimes (charged with concealment of criminal proceeds etc.).

(March, Kochi)

Note: "Ore-Ore" fraud is one of the types of "Furikome" fraud and a case where someone pretending to be a relative calls a victim to ask for money for some concocted emergency like the need to cover the embezzled company money, leading the shook-up victim to transfer cash to the deposit account designated by the caller.

### [Cases 2] (Concealment of criminal proceeds etc. related to the Sales of Indecent / Pirated DVDs through the Internet)

An unemployed man opened a website on the Internet to sell indecent DVDs and pirated ones of TV programs. Many customers purchased these illegal items and transferred a total of approximately 4.7 million yen to the Internet bank account under another person's name, managed by the suspect. The suspect was arrested for violation of the Act on the Punishment of Organized Crimes (charged with concealment of criminal proceeds etc.).

(July, Gunma)

### [Cases 3] (Concealment of Criminal Proceeds etc. related to Disposal of Stolen Items by Sale through the Internet Auction)

Gangsters of the organization affiliated with the Rokudaime Yamaguchi-gumi (Boryokudan) disposed of stolen car navigation systems by selling them on the Internet auction and using ID registered under another person's name. And the winning bidders were instructed to transfer a total of approximately 440,000 yen to the bank account under another person's name, managed by the suspects. The suspects were arrested for violation of the Act on the Punishment of Organized Crimes (charged with concealment of criminal proceeds etc.).

(September, Osaka)
receipt of criminal proceeds etc.

In each type of predicate offences of money laundering related to Boryokudan gangsters, there were 24 cases of fraud such as "Furikome Fraud", 17 cases of "loan sharking offences", 15 cases of violation of the Prostitution Prevention Law, 10 cases of habitual gambling and running a gambling place for the purpose of profit, 9 cases of theft, 8 cases of distribution of obscene goods, 3 cases each of acceptance for valve of stolen properties, and violation of the Pharmaceutical Affairs Laws, and 1 case of violation of the Trademark law. This indicates that Boryokudan gangsters commit money laundering by a variety of predicate offences.

(Note) Associates mean persons related to the Boryokudan other than Boryokudan members and likely commit illegal acts of violence etc. against the organized power of the Boryokudan or cooperate or deal with the maintenance and operations of the Boryokudan, such as financing or providing weapons etc. for the Boryokudan or Boryokudan members.

## (1) Examples of Money Laundering cases related to Fraud conducted by Boryokudan gangsters

The cases in which Boryokudan gangsters were involved accounted for 46.2% of all cases cleared of money laundering related to fraud including "Furikome Fraud" during 2010.

Boryokudan gangsters who commit fraud conceal criminals proceeds artfully by various methods such as tricking people into transferring money to bank accounts under different person's name by false demand for payments on the utilization of websites or by deceiving girlfriends with various ways such as entertaining them and the like (Case 6).

## [Cases 6] (Concealment of criminal proceeds related to cases of fraudulent borrowing from a girlfriend)

A gangster of the organization affiliated with the Rokudaime Yamaguchi-Gumi (Boryokudan) tricked his girlfriend, with whom he made acquaintance over a gaming website for mobile phones, into transferring the total sum of 2 million yen to a bank account, which he was managing, under the name of another person by asking her for a loan for various reasons, which she believed. He was arrested for violation of the Act on the Punishment of Organized Crime (charged with concealment of criminal proceeds etc.)

(April, Tokyo)

## (2) Examples of Money Laundering related to “Loan Sharking Offences” conducted by Boryokudan gangsters

The cases in which Boryokudan gangsters were involved accounted for 37.0% of all cases cleared of money laundering related to "loan sharking offences" during 2010.

Boryokudan gangsters concealed criminal proceeds artfully by means such as depositing illegally collected repayment in the accounts of their concubine, who was unaware of the situation (Case 7) and making borrowers transfer payment money to the bank accounts under other persons' name, which are managed by Boryokudan gangsters.