Silviase/jgov_v1.4_full_ann huggingface dataset:
tions across the country jointly by the Ministry of Finance and JAFIC in order to explain the overview and important points of the Act on Prevention of Transfer of Criminal Proceeds.

## 3 Futures Commission Merchants (Credit Unions)

In March 2013, a workshop for futures commission merchants was held in Tokyo by the Ministry of Economy, Trade and Industry in order to explain the overview and important points of the Act on Prevention of Transfer of Criminal Proceeds.

## 4 Postal Receiving Service Providers

In January 2013, workshops for postal receiving service providers were held in four locations across the country jointly by the Ministry of Economy, Trade and Industry and JAFIC in order to explain the overview and important points of the Act on Prevention of Transfer of Criminal Proceeds.

## 5 Telephone Receiving Service Providers and Telephone Forwarding Service Providers

In March and April 2013, workshops for telephone receiving service providers and telephone forwarding service providers were held in four locations across the country jointly by the Ministry of Internal Affairs and Communications and JAFIC in order to explain the overview and important points of the Act on Prevention of Transfer of Criminal Proceeds.

## 6 Others

JAFIC dispatched personnel to seven workshops held by various organizations in the private sector, including those held in February 2013 by the Japan Gold Metal Association for its members and by the Financial Futures Association of Japan for its employees and the one held in May of the same year by the Japan Consumer Credit Association for credit card companies in order to explain the overview and important points of the Act on Prevention of Transfer of Criminal Proceeds.

## 7 Issuing Guidelines for Supervision

Following the amendment of the Act on Prevention of Transfer of Criminal Proceeds, the Ministry of Economy, Trade and Industry partially revised the "Basic Guidelines on the Installment Sales Act (Deferred Payment Sector)" and the "Basic Guidelines on the Supervision of Futures Commission Merchants" in order to implement the new CDD and other obligations pursuant to the amended Act. It also adopted the "Points of Attention for Dealers in Precious Metals," which explains to such dealers the overview and important points of the Act on Prevention of Transfer of Criminal Proceeds, and requested the Japan Gold Metal Association to raise members' awareness about these matters.

## 8 Revision of List of Reference Cases of Suspicious Transactions

Following the amendment of the Act on Prevention of Transfer of Criminal Proceeds, competent administrative authorities responsible for overseeing specified business operators revised the "List of Reference Cases of Suspicious Transactions," which indicates red flags
to which the business operators should pay particular attention to find any suspicious activities behind them when performing the reporting obligation, and published the revised list.

## 9 PR on Website

The website of JAFIC has been created within the National Police Agency website, and its annual reports, the current status of JAFIC's activities, and a description of the Act on Prevention of Transfer of Criminal Proceeds are made available for public viewing.

Website of the National Police Agency

http://www.npa.go.jp

Website of JAFIC

http://www.npa.go.jp/sosikihanzai/jafic/index.htm

Japan Financial Intelligence Center (JAFIC)

Annual Report 2010

JAFIC Annual Report
## Paragraph 2 Calling for actions by Specified Business Operators upon the adoption of the United Nations Security Council Resolutions

When the United Nations Security Council adopts a resolution requiring countries to freeze the funds or other assets related to any persons or entities in order to prevent and suppress terrorism and terrorist financing, JAFIC, in cooperation with relevant Ministries and Agencies, shall disseminate the content to specified business operators and request the thorough implementation of CDD and suspicious transaction reporting obligation on persons or entities subject to the resolutions concerned. And, the targeted persons or entities shall be listed on the website of JAFIC.

## 1 Measures based on the United Nations Security Council resolutions (UNSCRs)

Japan implements targeted financial sanctions to freeze assets of persons or entities associated with the Taliban according to UNSCRs concerned. Every time the list of such parties is revised, JAfic requires specified business operators through supervisory authorities to fulfill their obligation of due diligence and ensure the reporting of all suspicious transactions. Such a requirement was made a total of six times in 2013.

## 2 Measures based on the FATF Public Statement

The FATF Plenary held in February, June and October 2013 adopted the Statement which called on all FATF members and other jurisdictions to apply countermeasures to protect the international financial system from money laundering and terrorist financing risks emanating from Islamic Republic of Iran and North Korea. In response, JAfic has issued a notice through supervisory authorities that specified business operators should properly conduct CDD and reporting obligation pursuant to the Act on Prevention of Transfer of Criminal Proceeds.

The Plenary also adopted a statement concerning the jurisdictions having strategic deficiencies in the measures against money laundering and terrorist financing, to which JAFIC referred in the notice above.

## Paragraph 3 National Risk Assessment of Money Laundering and Terrorist Financing

## 1 Backgrounds

In modern society, where the advance of IT and the globalization of economic activities and financial services are proceeding, the situation surrounding money laundering and terrorist financing is constantly changing. To strenuously implement AML/CFT, global actions based on cooperation between countries need to be taken.

The FATF Recommendations revised in February 2012 (new FATF 40 Recommendations) call on individual countries to identify and assess money laundering and terrorist financing risks for the country.
In light of the fact that companies and legal arrangements are being misused for money laundering and tax evasion due to a lack of transparency over their ownership and control, at the G8 Lough Erne Summit held in June 2013, an agreement was reached on the G8 Action Plan Principles to prevent the misuse of companies and legal arrangements, which calls for concrete actions including that authorities should understand the risks to which their AML/CFT regime is exposed and implement proportionate measures to target those risks.

【A scene from a meeting of the Working Group】

Responding to the G8 agreement, Japan expressed its strong commitment to AML/CFT by issuing the national action plan in the same month declaring that the government would establish an inter-ministerial working team with the Financial Service Agency on board under the chair of the National Police Agency with a view to completing the works on the national risk assessment by the end of 2014.

## 2 Purpose

The national risk assessment should serve as a basis of the risk-based approach which specified business operators apply in order to perform AML/CFT measures more effectively and efficiently in a way commensurate with the level of risk of each transaction and the customer or business relationship identified through the national risk assessment.

## 3 Ongoing works

In response to the Japan Action Plan, relevant ministries and agencies are working together to complete the national risk assessment by the end of 2014 through the Working Group on the National Risk Assessment of Money Laundering and Terrorist Financing that was established in July 2013 as a subcommittee of “the Related Ministry Liaison Conference regarding Implementation of FATF Recommendations.”

## Section 3 Progress of the collection of reports and opinion statements in 2013

When suspicion surfaces during the investigation of special fraud cases including Furikome fraud and other crimes by the Prefectural Police with regard to the violation of the obligation of customer identity verification and other matters prescribed in the Act on Prevention of Transfer of Criminal Proceeds, JAFIC makes requests to the alleged specified business operators for submission of reports, gives directions to the relevant prefectural Police on necessary inquiry, and makes opinion statements to competent administrative authorities.
## 1 Collection of Reports and Opinion Statements by JAFIC

In 2013, JAFIC made 11 requests to submit report to Postal Receiving Service Providers, and gave a direction to Prefectural Police to make necessary inquiry. In addition, based on the result of the past report collection, JAFIC issued ten opinion statements to competent administrative authorities in charge of supervising specified business operators; specifically, nine statements to the Minister of Economy, Trade and Industry, which is the authority over postal receiving service providers; and one to the Minister of Internal Affairs and Communications, which is the authority over telephone receiving service provider. The purpose of these statements is to encourage these authorities to take necessary measures that will rectify the violations of the Act by their supervising specified business operators. No on-site inspections were performed.

Table 3-1 Number of supervisory actions

Year	2009	2010	2011	2012	2013
Number of requests to submit reports to specified business operators	16	7	5	9	11
Number of directions to conduct inquiry to prefectural police	2	10	3	3	1
Number of opinion statements made to competent administrative authorities	9	13	10	10	10

## 2 Issuing of Rectification Order by Competent Administrative Authorities Based on Opinion Statements

In 2013, in light of Opinion Statements issued by JAFIC, the Minister of Economy, Trade and Industry issued six Rectification Orders to postal receiving service providers, while the Minister of Internal Affairs and Communications issued a Rectification Order to a telephone receiving service provider.

This was the first Rectification Order issued against a telephone receiving service provider since the enforcement of the Act on Prevention of Transfer of Criminal Proceeds.

## Rectification Order against a Telephone Receiving Service Provider

It has come to the attention of JAFIC that a telephone receiving service provider posed a serious failure in starting a business relationship with a customer running a loan sharking business that obviously tried to exploit its slack verification. JAFIC advised the Minister of Internal Affairs and Communications who was responsible for the business that the entity should receive a rectification order due to the failure of the required obligation. Based upon the advice, the Minister issued the order against it calling for stringent compliance.

(Osaka)
# Reports of Suspicious Transactions

The Act on Prevention of Transfer of Criminal Proceeds requires specified business operators to file a report with competent administrative authorities when a transaction is suspected to be related to criminal proceeds. This measure was made an obligation for the first time in the Anti-Drug Special Provisions Law and was taken over to the Act on Prevention of Transfer of Criminal Proceeds through the Act on Punishment of Organized Crimes.

## Section 1 System Outline

## 1 Purpose

The Suspicious Transaction Reporting System aims to support investigation on money laundering and its predicate offences as well as terrorist financing, to prevent the misuse of financial or other services provided by specified business operators and to ensure soundness and trust of business activity.

## 2 Flow of Suspicious Transaction Reporting

Information reported by specified business operators is collected at JAFIC via the competent administrative authorities. JAFIC collates and analyzes suspicious transaction reports (STRs) to disseminate those deemed valuable to receiving investigative authorities such as the Prefectural Police, the Public Prosecutors Office, etc. for their use.

The receiving investigative authorities utilize STRs as clues for initiating an investigation against a specific suspicious activity, or identifying criminal proceeds or sources of illicit funds. JAFIC also provides interested foreign FlUs with information on cross border transac-

Figure 4-1 Flow of STRs from Specified Business Operators, through JAFIC to Investigative Authorities
tions as necessary, in order to facilitate their analysis or investigation into global scale mon\-ey laundering.

Furthermore at JAFIC, a detailed analysis of STRs is carried out by using the information accumulated by the police, and the outcomes are supposed to be disseminated to interested investigative authorities.

## 3 When STRs are Required

Under Article 8 of the Act on Prevention of Transfer of Criminal Proceeds, it is required that specified business operators (excluding professions such as lawyers and certified accountants) promptly file an STR with the competent administrative authorities when there is any suspicion, taking into account information obtained through CDD that assets they received could be criminal proceeds or that the customer could commit money laundering (i.e. violations of Article 10 of the Act on Punishment of Organized Crimes or Article 6 of the Anti-Drug Special Provisions Law).

Figure 4-2 Cases where STRs are required

## 4 List of Reference Cases of Suspicious Transactions

Specified business operators are expected to determine whether there is any suspicious activity behind the transaction concerned based on their own knowledge and experience in their particular field of business, also taking into account the nature of transaction or customer. It may well be the case, however, that some operators simply lack adequate understanding of money laundering and find it difficult to make an appropriate judgment. Therefore,
in Japan, competent administrative authorities have announced “reference cases of suspicious transactions,” based on the characteristics of respective specified business operators. These reference cases are however just samples of suspicious transactions and are intended merely for reference.

This means, it is necessary for the specified business operators to determine whether an individual case is a suspicious transaction, taking into account the client's attributes, conditions surrounding the transaction and other specifics of the transaction. All the transactions that appear to match the listed samples do not necessarily have to be reported as suspicious, while transactions that do not fall within any of them may still be suspicious and subject to reporting.

## 5 Information Security

Since STRs include sensitive information on individuals and business activities, JAFIC carries out due information security measures to prevent leakage, loss, damage, or other misconduct. The handling of relevant information is set forth in the regulations of NPSC.

In particular, since a large amount of information is stored in the database system which manages suspicious transactions, sufficient security measures need to be taken. Various security measures put in place at JAFIC are as follows.

## (1) Management of Entering and Exiting

Terminals that can access information stored in the JAFIC database are located in a room with doors that are controlled by a biometric authentication system. Only a limited number of staff members are permitted to enter the room.

## (2) Three Steps of Authentication

In order to access the information in the JAFIC database, three levels of authentication are required. In other words, information can be reached only after authentication is carried out 3 times, in 3 different ways. During the authentication procedure, if more than one mistake occurs, access to the terminal is denied to prevent unauthorized use.

## (3) Surveillance of Terminal

All processing operated at the terminals, such as file inquiries and printing, is monitored and recorded by the surveillance software. This allows for tracing in case of wrongful operation, and prevents improper use of information within the organization.

## (4) Physical Measures of Terminals

Each terminal is firmly affixed to a desk with a security wire, to prevent theft.

## (5) Strengthening of Server Management

The server that contains reported information is located in a server room with adequate security measures, and only qualified staffs are allowed to enter.

## (6) Encryption of Terminal’s Hard Disk Drive Information

The hard disk drives on the terminals that are used to access the database system are all encrypted. Hence, even if the hard disk drives are removed and taken out, the information recorded in the hard disk drive and all related programs will still be inaccessible.

## (7) Encryption of Circuit

Transmission between the server and the terminals is encrypted with a special circuit.
## Section 2 Situation of STR filings in 2013

## 1 Transition of the Number of STR filings

Although the suspicious transaction reporting system was established with the enforcement of the Anti-Drug Special Provisions Law in 1992, less than 20 reports were received each year between 1992 and 1998, largely because the subjects of reporting was limited to proceeds derived from drug-related crimes. Under these conditions, that reporting system could not be considered to be fully functional. However, since the enactment of the Act on Punishment of Organized Crimes in 1999, crimes subject to suspicious transaction reports were extended besides drug-related crimes to include other serious crimes as specified by the act, and the number of reports received exceeded 1,000 cases in the same year. Since the enforcement of the Act on Punishment of Organized Crimes in the year 2000, the number of reports has increased every year, and has kept increasing since the partial enforcement of the Act on Prevention of Transfer of Criminal Proceeds in 2007. The number of reports received in 2013 was 349,361 (see Figure 4-3).

Figure 4-3 Trend Diagram of Number of STRs (2004-2013)

Note 1: "Number of Reports Received" (2003-2012) is the total number of the reports received by the Financial Services Agency (JAFIO) until March 2007 and those received by the National Public Safety Commission/the National Police Agency (JAFIC) after April 2007.

Note 2: "Number of Reports Disseminated" (2002-2011) is the total number of the reports disseminated by JAFIO to the National Police Agency until March 2007 and those disseminated by JAFIc to investigative authorities etc. after April 2007.

As a possible underlying factor of this trend, the following can be raised.

○Spreading compliance culture among the general public has encouraged financial institutions' efforts in fighting against anti-social forces and applied stringent monitoring over
their financial or other economic activities.

What the existing AML/CFT regime intends has been steadily shared with the private sector through workshops or seminars.

Specifically, financial institutions have allocated much more resources to various AML/CFT measures. In particular, financial institutions with larger submission of STRs are promoting training programs for their employees to improve the individual AML/CFT capability, while having strengthened the IT system to identify suspicious transactions, by increasing the number of personnel in charge of money laundering countermeasures and the introduction of the detection systems for suspicious transactions.

No file of STRs was deleted by JAFIC in 2013.

## 2 Number of Received Reports by Business Types

The number of suspicious transaction reports that each category of business operators filed in 2013 is shown in table 4-2. Banks etc. have the highest number of reports with 313,435 cases, or 89.7% of all reports, followed by Shinkin banks and credit cooperatives (14,089 cases, or 4.0%), and financial instrument business operators (7,373 cases, or 2.1%) (see Table 4-1).
Table 4-1 Number of Received STRs by Each Business Type

Year	2009	2010	2011	2012	2013
Category	Number of reports	%	Number of reports	%	Number of reports	%	Number of reports	%	Number of reports	%
Financial Institutions etc.	270,628	99.4%	292,529	99.4%	334,903	99.3%	360,513	98.9%	344,147	98.5%
Depository Institutions	265,051	97.3%	283,971	96.5%	324,600	96.2%	348,831	95.7%	329,127	94.2%
Banks etc.	253,668	93.1%	272,215	92.5%	311,298	92.3%	333,868	91.6%	313,435	89.7%
Shinkin Banks and Credit Cooperative	10,941	4.0%	11,156	3.8%	12,453	3.7%	13,521	3.7%	14,089	4.0%
Labour Banks	161	0.1%	243	0.1%	248	0.1%	357	0.1%	290	0.1%
Norinchukin Banks etc.	281	0.1%	357	0.1%	601	0.2%	1,085	0.3%	1,313	0.4%
Insurance Companies	183	0.1%	202	0.1%	677	0.2%	1,837	0.5%	3,002	0.9%
Financial Instruments Business	3,821	1.4%	5,666	1.9%	6,758	2.0%	5,998	1.6%	7,373	2.1%
Money Lending Business	1,148	0.4%	634	0.2%	581	0.2%	1,628	0.4%	1,872	0.5%
Fund Transfer Companies	73	0.0%	344	0.1%	380	0.1%	363	0.1%
Commodity Futures Traders	7	0.0%	13	0.0%	5	0.0%	3	0.0%	53	0.0%
Currency Exchanging Operators	418	0.2%	1,970	0.7%	1,937	0.6%	1,835	0.5%	2,119	0.6%
Electronic Monetary Claim Recording Institutions	0	0.0%	0	0.0%	1	0.0%	1	0.0%	1	0.0%
Other	0	0.0%	0	0.0%	0	0.0%	0	0.0%	237	0.1%
Financial Leasing Operators	60	0.0%	83	0.0%	45	0.0%	109	0.0%	62	0.0%
Credit Card Operators	1,510	0.6%	1,617	0.5%	2,350	0.7%	3,664	1.0%	5,086	1.5%
Real Estate Agents	33	0.0%	21	0.0%	5	0.0%	10	0.0%	1	0.0%
Dealers in Precious Metals and Stones	0	0.0%	19	0.0%	4	0.0%	28	0.0%	7	0.0%
Postal Receiving Service Providers	92	0.0%	36	0.0%	34	0.0%	42	0.0%	57	0.0%
Telephone Receiving Service Providers	2	0.0%	0	0.0%	0	0.0%	0	0.0%	0	0.0%
Telephone Forwarding Service Providers	0	0.0%
Other	1	0.0%
Total	272,325	100.0%	294,305	100.0%	337,341	100.0%	364,366	100.0%	349,361	100.0%

## 3 Number of Received Reports Classified by Methods

According to reports of suspicious transaction by method, report by electronic application using the e-governance on-line window (e-Gov), or other means (for example, sending documents etc. to the competent administrative authorities) are described in Table 4-3.
Table 4-2 Number of Received Reports Classified by Method

Year	2009	2010	2011	2012	2013
Notification Method	Number of reports	%	Number of reports	%	Number of reports	%	Number of reports	%	Number of reports	%
Electronic Application	156,291	57.4%	172,394	58.6%	184,774	54.8%	236,882	65.0%	255,258	73.1%
Other Methods	116,034	42.6%	121,911	41.4%	152,567	45.2%	127,484	35.0%	94,103	26.9%
Total	272,325	100.0%	294,305	100.0%	337,341	100.0%	364,366	100.0%	349,361	100.0%

Report rate by electronic application in 2013 was 73.1%, an increase of 8.1 points from the previous year.

JAFIC will continue working on further prevalence of the online reporting at all opportunities in order to reduce burdens on the reporting entities associated with the obligation.

## Section 3 Dissemination and Use of STRs in 2013

## Paragraph 1 Dissemination

JAFIC collects, arranges, and analyzes all STRs and provides investigative authorities with STRs that have been deemed conducive to the investigation of money laundering, predicate offences or other offenses. The receiving investigative authorities are the Prefectural Police, Public Prosecutors Office, Narcotics Control Department, Japan Coast Guard, Japan Customs and SESC.

The number of reports on suspicious transactions provided to investigative authorities has kept growing every year, which was 296,501 in 2013, an increase of 15,026 cases (5.3%) from the previous year. (See figure 4-3). Besides, JAFIC also responded to two queries from an investigative authority seeking a copy of STR.

## Paragraph 2 Use of STRs in the Prefectural Police

The number of cases cleared by prefectural police that were initiated with information in STRs (“STR-initiated cases”) has increased every year. The number was 962 in 2013, an increase of 76 cases (8.6%) from the previous year.

Table 4-3 shows the STR-initiated cases categorized by crime type.