40 Recommendations," and recommended that the scope of predicate offences be extended from drug crimes to serious crimes.

Further, at the Birmingham Summit in May 1998, it was agreed by the participating countries to create FIUs (Financial Intelligence Units), which are dedicated to collect, analyze and disseminate money laundering information, as a measure to utilize the suspicious transaction reports for criminal investigation effectively.

Later, in response to the terrorist attacks in the US in September 2001, the FATF held an emergency session, where it issued "The 8 Special Recommendations" including criminalizing terrorist financing and freezing terrorist assets considering it necessary to include anti-terrorist financing measures within the scope of anti-money laundering measures. In 2004, a new recommendation related to the measure to prevent the physical cross-border transportation of funds was added to these recommendations, which made them "The 9 Special Recommendations".

## 3 Countermeasures to Sophistication of Modus Operandi of Money Laundering

In accordance with development of anti-money laundering measures, the trend of money laundering itself has also been changing. The FATF put the highest emphasis in its consideration on the hiding of funds using business sectors other than financial institutions. As a result, the FATF revised again in June 2003 "The 40 Recommendations" by extending the scope of operators required to take measures including customer identification, etc. The FATF has been studying new methods of money laundering engineered in various countries and regions in the world since then, such as money laundering using new payment systems, alternative remittance systems, trade-based money laundering, etc. and providing multiple advice on countermeasures through publishing reports and other methods.

## Section2 Anti-Money Laundering Measures in Japan

## 1 Enforcement of "the Anti-Drug Special Provisions Law"

Anti-money laundering measures in Japan have been developed step by step in accordance with initiatives of the international society. Firstly, "the Law concerning Special Provisions for the Narcotics and Psychotropics Control Law, etc. and Other Matters for the Prevention of Activities Encouraging Illicit Conduct and Other Activities Involving Controlled Substances through International Cooperation" (hereinafter referred to as "the Anti-Drug Special Provisions Law") was enforced in 1992 as one of the domestic laws implementing "UN New Narcotics Convention", aiming mainly at dealing with drug crime proceeds. This law criminalized money laundering activities connected with drug crimes for the first time in Japan and established the suspicious transaction reporting system (regarding drug crime proceeds) by financial institutions, etc. in response to "the FATF 40 Recommendations."

## 2 Enforcement of the Act on the Punishment of Organized Crime

The FATF mutual evaluation of Japan in 1994 pointed out a negative view on the limit of predicate offences for money laundering to illegal drug crimes. It was difficult for financial institutions, etc. to determine if each transaction was actually related to drug crimes in reporting suspicious transaction, resulting in the fact that the suspicious transaction reporting system did not work effectively. To rectify these problems, the "Act on Punishment of Organized Crimes and Control of Crime Proceeds" (hereinafter referred to as "Act on the Punishment of Organized Crime") was adopted (enforced in Feb. 2000) in Japan based on the FATF recommendations as revised in June 1996. This law represented progress in regulations against criminal proceeds on several points.

One such progress is that the scope of predicate offences for money laundering was extended and the