Silviase/jgov_v1.4_full_ann huggingface dataset:
Figure 2-3 Methods of Verification at the Time of Transaction

For transactions that carry a high risk of money laundering, verification of transaction purposes 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 12 and 13)

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 14 through 18, 24, 25 and 29)

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 over the regulated businesses such as on/off-sight inspection or issuing a rectification order for non-compliance.

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 vio-
lates 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 Reception/Delivery/Provision of Deposit/Savings Passbooks and Exchange Transaction Cards(Articles 27 and 28)

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 it, 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 Anti-Drug Special Provisions Law and the Act on Punishment of Organized Crimes

## Paragraph 1 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 Convention 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.

The Anti-Drug Special Provisions Law included, at the time of enactment, provisions on reports of suspicious transactions, which have been taken over by the Act on Punishment of Organized Crimes, then by the Act on Prevention of Transfer of Criminal Proceeds.

## 1 Criminalization of Money Laundering

The Anti-Drug Special Provisions Law for the first time criminalized the act of money laundering given the fact that money laundering had helped further crimes.
### (1) Concealment of drug crime proceeds etc. (Article 6)

The following acts are criminalized by this article: (i) Act of “disguising facts with respect to acquisition or disposition of drug crime proceeds etc.” (ii) Act of “concealing drug crime proceeds etc.” and (iii) Act of “disguising facts with respect to the source of drug crime proceeds etc.”

Examples of the act (i), “Act of disguising facts with respect to acquisition” is the act of depositing drug crime proceeds etc. under the name of another person, the act of manipulating the books by pretending profits were gained by legitimate business activities, or the like.

An example of the act (i), “Act of disguising facts with respect to disposition” is the act of purchasing goods under the name of another person, using drug crime proceeds etc. or the like. Examples of the act (ii), “concealing” is actions such as physically concealing and sending money to a country or region where it is considerably difficult to trace the funds, or the like. An example of the act (iii), “Act of disguising facts with respect to the source” is the drug purchaser’s act of pretending the payment for purchase is a repayment of a fictitious debt.

### (2) Crime of receipt of drug crime proceeds etc. (Article 7)

The act of “knowingly receiving drug crime proceeds etc.” is criminalized by this article. An act in which a main member of Boryokudan group receives money from those who works under him, knowing that the money has been obtained from drug crime, is an example of this case.

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

Drug crime proceeds shall be confiscated. If it cannot be confiscated because, for example, it has already been consumed or the right thereof has been transferred, collection of equivalent value will be ordered. The system of confiscation and collection of equivalent value provided in Anti-Drug Special Provisions Law has been strengthened compared to the existing system of confiscation and collection of equivalent value in the Penal Code in that the target is not limited to tangible property, but is extended to deposit claims etc. and that confiscation and collection of equivalent value are compulsory. Moreover, it can be prohibited by court order to dispose of drug crime proceeds which should be confiscated prior to court decision in order to ensure the confiscation of the proceeds. As the risk of disposal by a criminal will be raised if he/she knows of the commencement of investigation, the court can issue a securance order even before the prosecution upon request of a police officer etc. with a fixed period of 30 days, which could be renewable.

## Paragraph 2 The Act on Punishment of Organized Crimes

The Act on Punishment of Organized Crimes was enacted in tandem with the extension of predicate offences in the revised FATF “40 Recommendations” of 1996 and the international agreement on the establishment of an FIU, and was enforced in February 2000. In terms
of criminal proceeds regulations, this law is characterized by the extension of the scope of predicate offences from drug crimes to those and certain other serious crimes.

The regulations related to the functions of FLU initially existed in the Act on Punishment of Organized Crimes, but they are now superseded by the Act on Prevention of Criminal Proceeds.

## 1 Punishment of Money Laundering (Article 9 through 11)

According to the Act on Punishment of Organized Crimes, in addition to acts of disguising, concealing, and receiving stipulated in the Anti-Drug Special Provisions Law, changing a director etc. as a means of managing an enterprise etc. by using illicit proceeds shall be punished as another type of money laundering. The range of predicate offences that generate criminal proceeds is stipulated in the attachment to the Act on Punishment of Organized Crimes, to which additional predicate offences are added as necessary.

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

The system of confiscation and collection of equivalent value provided in the Act on Punishment of Organized Crimes is subject to the discretion of the court, unlike the system provided in the Anti-Drug Special Provisions Law. However, it has been strengthened compared to the existing system in the Penal Code in that the target is extended to monetary claims, assets obtained as the fruit of criminal proceeds are also within the scope, securance measures have been established, and so on.

At the time of the enactment of the Act on Punishment of Organized Crimes, it was stipulated that so-called “crime victim property”, such as proceeds obtained through crime concerning property etc. may not be confiscated nor additional collections made in consideration of damage claims by victims. However, the law was partially revised (enforced in Dec. 2006) to enable confiscation or additional collection in certain cases for example where the crime is considerably organized in which it would be difficult to recover damages asserting rights to seek damages or other rights, or where money laundering is involved.

## Section 3 Recent Legislative Changes

In order to address the current money laundering trends the National Police Agency has made necessary amendments as appropriate to the Act on Prevention of Transfer of Criminal Proceeds and its subordinate decrees.

## 1 Amendment of the Act on Prevention of Transfer of Criminal Proceeds to include a new type of business which has been defined by the amendment to the Real Estate Specified Joint Enterprise Act

In December 2013, the Act on Prevention of Transfer of Criminal Proceeds was partially amended following the enforcement of the Act to Partially Amend the Real Estate Specified
Joint Enterprise Act (hereinafter referred to as the "Amended Act"). As a result of the enforcement of the Amended Act, it has become possible for corporations which plan to engage in real estate specified joint enterprise and which meet certain conditions, such as engaging exclusively in real estate specified joint enterprise, to conduct business as special business operators if they report to the authorities, without obtaining a license for a real estate specified joint enterprise operator. However, the special business operators are not different from real estate specified joint enterprise operators which are treated as specified business operators under the Act on Prevention of Transfer of Criminal Proceeds in that they conduct business based on real estate specified joint enterprise contracts concluded with investors. Therefore, the Act on Prevention of Transfer of Criminal Proceeds was amended so as to include the special business operators in the scope of specified business operators, thereby subjecting them to such obligations as reporting suspicious transactions and identifying customers preparing and preserving transaction records.

## 2 Consultation with the Advisory Panel of Experts on AML/CFT

The Advisory Panel of Experts on AML/CFT has met five times from June to December in 2013 to discuss about better ways for AML/CFT from wider perspectives of academics and various fields of business. They were asked for advice with regard to the renewed regime to be proposed by the government with a view to addressing outstanding issues in relation to MER of the FATF.
# Efforts of Specified Business Operators and Promotion of Public Awareness

In order to effectively implement countermeasures against money laundering, it is critical that every obligation imposed on specified business operators is properly enforced. For this purpose, robust efforts have to be made at the private sector level. JAFIC is working together with relevant competent ministries on providing various outreach programs to support their own efforts by organizing an AML/CFT workshop and posting the latest information on the website.

Importantly, JAFIC would, when there is non-compliance, exercise its supervisory power over the non-compliance in consultation with the supervising administrative authority to issue a rectification order against the specified business operator concerned.

## Section 1 Efforts of Specified Business Operators

## 1 Banking Industry

The “Japanese Bankers Association” (hereinafter referred to as “JBA”), of which most of the banks operating in Japan are members, established the “Working Committee on Money Laundering Issues” within the JBA in 1990 and, since then, has been taking AML/CFT, such as preparing and providing notices on items to keep in mind regarding CDD and STR filing, preparing and distributing seminar handbooks to its members, giving seminars for its members, and so on. Furthermore, the JBA prepares leaflets, posters or the like to inform customers of CDD procedure. In addition, the JBA is promoting organizational measures on issues related to money laundering or terrorist financing inside or outside of Japan by following, at all times, the development of AML/CFT measures at the FATF, exchanging and sharing information constantly with foreign bankers associations or the like, making responses to the FATF’s mutual evaluations of Japan, and so forth. As an example of the JBA playing a leading part in the efforts of the banking industry, is that it incorporated provisions on compliance including the prevention of money laundering and terrorist financing and confrontation with anti-social forces into the JBA “Code of Conduct,” (revised in November, 2013), and prompted its members to put such into practice.

## 2 Shinkin Banks (Credit Unions)

As for the credit union industry, in 1997 the National Association of Shinkin Banks established the Shinkin Banks Ethics Program (re-named the Shinkin Banks Action Program in
only members but all moneylending businesses to view these materials, in efforts to facilitate the adoption of said clause.

The Association conducts both document and field work inspections. The Association audits member company compliance by assessing how well internal systems contained in the directive entitled “Preventing Damages Caused by Money Laundering, Terrorist Financing, and Anti-social Forces” are established.

The Association also notes information on preventing damages caused by money laundering and anti-social forces on the Association’s website in order to familiarize association members with these issues.

In FY 2013, regarding the money lending industry’s efforts to deal with anti-social forces, members were requested through the Association’s website to take special care in conducting money lending business so as to cancel a contract as soon as possible when they have recognized a transaction with an anti-social force regardless of whether it is at the time of or after the conclusion of a contract and to eliminate relationships with antisocial forces. In addition, the Association is considering collecting information on anti-social forces from the JBA for provision to members.

## 8 Fund Transfer Industry

The Japan Payment Service Association is an authorized fund settlement cooperative whose purpose is to facilitate sound development of advanced payment means issuance services and fund transfer services, as well as to protect users' profits. The Association engages in a variety of countermeasures against money laundering and terrorist financing. In 2010, the Association enacted voluntary regulations pertaining to member systems for accurate response to verification of customer identity and to suspicious transaction reporting for member of fund transfer businesses. In March 2011, the Association devised an internal regulation model, as well as a system to disseminate information on parties subject to asset freezing provided by the Financial Services Agency, also for fund transfer businesses.

In response to the full enforcement of the revised Act on Prevention of Transfer of Criminal Proceeds, the Association provides advance announcements to members on information regarding the revised act, as well as providing this information on its website. The Association also takes up the issue of countermeasures against money laundering amongst its members through workshops.

## 9 Leasing Industry

The Japan Leasing Association is an industry organization for the public interest, comprised of companies engaged in the leasing business. In March 2008, following the revision of the Act on Prevention of Transfer of Criminal Proceeds, the Association compiled and distributed an educational pamphlet targeting leasing customers. In September 2012, the Association compiled and distributed a pamphlet regarding the revised Act, which was also posted on its website along with related materials, in efforts to further familiarize association members with the issues.

In addition, the Japan Leasing Association holds an annual training program (advanced
(course), in which trainees, primarily leasing company managers, are trained in the Act on Prevention of the Transfer of Criminal Proceeds.

## 10 Credit Industry

In November 2012, the Japan Consumer Credit Association has incorporated items on verification of customer identity and on suspicious reports based on the Act on Prevention of Transfer of Criminal Proceeds into its comprehensive credit purchase regulations, requiring that its member companies comply.

## 11 Real Estate Industry

In December 2007, the real estate industry established the "Liaison Council for Preventing Transfer of Criminal Proceeds and Preventing Damage by Anti-social Forces in the Real Estate Industry" so that the real estate industry as a whole, can promote collective efforts to prevent the transfer of criminal proceeds and eliminate anti-social forces. It proceeds with taking measures to share the information regarding the operation of systems including the Act on Prevention of Transfer of Criminal Proceeds, through efforts such as agreeing to the development of a responsibility system within relevant business operators, and preparing and distributing brochures etc. for the purpose of enlightenment.

Following the enforcement of the revised Act on Prevention of Transfer of Criminal Proceeds, the Council has updated its handbook for real-world professionals and enhanced its Q & A section concerning the outline and implementation of the revised act.

In addition, the Council invited lawyers and other experts as lecturers at workshops for members to provide explanations about actions to be taken in response to the amendment of the Act on Prevention of Transfer of Criminal Proceeds.

## 12 Precious Metals Industry

The Japan Gold Metal Association invited personnel of the National Police Agency as lecturers at a workshop held in February 2013 to receive explanations about the overview of the Act on Prevention of Transfer of Criminal Proceeds, thereby raising members' awareness about actions to be taken based on the amendment of the same act.

## 13 Secondhand Goods Dealers

The Japan Ticket Association is comprised of licensed secondhand goods dealers who also engage in ticket sales. The Association has compiled a manual of obligations required by laws (the Act on Prevention of Transfer of Criminal Proceeds and the Antique Dealings Act) related to precious metal and foreign exchange transactions. This manual is intended to help familiarize members with countermeasures against money laundering.

The association also explains the overview of the Act on Prevention of Transfer of Criminal Proceeds and the obligations of specified business operators at a seminar for members.

## 14 Lawyers

The Japan Federation of Bar Associations had been examining the relation between an-
By customer identity records and keep transaction records based on the Act on Prevention of the Transfer of Criminal Proceeds.

## 16 Certified Administrative Procedures Specialists

To facilitate implementation of the initiatives of the Act on Prevention of Transfer of Criminal Proceeds, the Japanese Association of Certified Administrative Procedures Specialists has compiled a handbook entitled "Handbook on Customer Identity Verification under the Act on Prevention of Transfer of Criminal Proceeds," which has been distributed to all members. In addition, the Association presents information on the Act to its members through its website in order to familiarize all members with the material.

## 17 Certified Public Accountants

The Japanese Institute of Certified Public Accountants disseminates information on countermeasures against money laundering, etc., not only in regard to the Act on Prevention of Transfer of Criminal Proceeds but also as relates to the Act on Punishment of Organized Crimes, through member newsletters and the association website, in order to thoroughly familiarize members with these issues. In addition, the association conducts member workshops, in which it provides overviews of the Act on Prevention of Transfer of Criminal Proceeds and countermeasures against money laundering.

## Section 2 Collaboration with the private sector

## Paragraph 1 AML/CFT Workshop for Information sharing and feedback in 2013

## 1 Financial Institutions

JAFIC jointly held with the Financial Services Agency, the “Suspicious Transaction Reporting Workshop” for financial institutions 14 times, at a total of 12 places around the country, from September to November 2013, where they gave feedback learned from case studies of

actual investigations involving STR informa-

tion and advice with regard to key points in performing the reporting work.

At a seminar held in Tokyo in July 2013 by Shinkin Central Bank, the Financial Services Agency also explained the overview and important points of the Act on Prevention of Transfer of Criminal Proceeds.

## 2 Currency Exchanging Operators

In March 2013, workshops for currency ex-changing operators were held in seven loca-

Explanation at a Seminar