# Establishment of the Japan Financial Intelligence Center (JAFIC) and Police Activities

On April 1, 2007, JAFIC was established within the Organized Crime Department, the Criminal Investigation Bureau of the National Police Agency, when the Act on Prevention of Transfer of Criminal Proceeds came into force. JAFIC is an institution playing a central role in the enforcement of the said law mainly by collecting, arranging and analyzing suspicious transaction reports (STRs) filed by specified business operators and disseminating such information to public prosecutors, etc. As shown in the structure of the Act on Prevention of Transfer of Criminal Proceeds, understanding and cooperation of the public, especially specified business operators are indispensable for JAFIC to exercise its function.

## Section1 Background of Establishment of JAFIC

Many countries have institutions equivalent to JAFIC. They are generally called FIUs (Financial Intelligence Units). Egmont Group, established in 1995 as a forum for exchanging information between FIUs, defines an FIU as a "central, national agency responsible for receiving, analyzing and disseminating to the competent authorities, disclosures of financial information: (1) concerning suspected proceeds of crime and potential financing of terrorism, or (2) required by national legislation or regulation, in order to combat money laundering and terrorism financing".

In Japan, although reporting suspicious transactions was made obligatory by the Anti-Drug Special Provisions Law, which came into effect in July 1992, it did not establish the system for centralization and dissemination of the information. Japan's first FIU was established within the Financial Supervisory Agency (reorganized into the Financial Services Agency in July 2000), when the Act on the Punishment of Organized Crime came into effect in February 2000, and it had the responsibility to handle information on suspicious transaction and exchange information with foreign counterparts under this Act.

The scope of suspicious transaction reports was to be extended as well, as the scope of business operators required to rate anti-money laundering measures was extended by the Act on Prevention of transfer of Criminal Proceeds from financial institutions etc. to those and real estate agents, dealers in precious metals and stones, etc. Therefore, it was thought that not the Financial Service Agency which supervises financial institutions, but the National Police Agency which makes use of reported information for investigation or countermeasures against organized crime and terrorism is suited for the renewed function of FLU which centers on arrangement and analysis of the extended STRs.

This idea was unveiled in November 2005, when Government's "Headquarters for the Promotion of Measures against Transnational Organized Crime and Other Relative Issues and International Terrorism" decided to draft the bill of the new AML/CFT law

The Act on Prevention of Transfer of Criminal Proceeds clarified that the National Public Safety Commission (NPSC), which controls the National Police Agency and is aided by it, is responsible for prompt and appropriate collection, arrangement and analysis of suspicious transaction reports filed from specified business operators. The Act also granted the NPSC a function related to the handling of STRs including