## I ntroduction

For years, it has been a major challenge for us to tackle the dispersal of criminal proceeds in the fight against organized crime, especially that committed by boryokudan and other groups. The Police, at this conjuncture, is dedicated to working on AML/CFT in accordance with the Act on Prevention of Transfer of Criminal Proceeds together with relevant authorities, the private sector, and foreign Flu partners.

Under the Act on Prevention of Transfer of Criminal Proceeds, specified business operators are required to perform customer due diligence (CDD) and record-keeping, and file suspicious transaction reports (STRs) with a competent administrative authority. These STRs are collected, organized, and analyzed by the National Police Agency, which administers the mandate granted to the National Public Safety Commission on its behalf, and will then be disseminated to law enforcement agencies to support their investigations.

The amended Act on Prevention of Transfer of Criminal Proceeds, which was fully enforced in April 2013, put in place a more comprehensive CDD regime, and at that time a business becoming vulnerable to misuse, “the call forwarding business,” was added to the list of designated non-financial businesses or professions to put under the regime. Thus, the AML/CFT regime in Japan has been significantly strengthened.

In this globalized world, however, the international financial system has become much more exposed to the risk of misuse for the purpose of money laundering taking place across borders or in very sophisticated ways. The Financial Action Task Force (FATF), therefore, amended the 40 Recommendations in February 2012, calling upon all jurisdictions around the world to follow the more stringent standard. In this context, a strong commitment to compliance with the FATF standards was expressed by G8 leaders when they met in Lough Erne in June 2013, by their adoption of the "G8 Action Plan Principles to prevent the misuse of companies and legal arrangements," in an effort to mitigate the risk of legal persons or arrangements being misused for money laundering, tax evasion, or other illicit purposes. Japan's AML/CFT regime also needs to be further developed from a wider perspective by keeping abreast of domestic or international ML/TF trends, and also hearing inputs or opinions from various parties.

What is imperative for achieving the challenge is that law enforcement agencies strategically take measures in cooperation with the private sector from the viewpoint of global cooperation and coordination. This will never be possible unless we gain broad public support and understanding.

The aim of this annual report is to make individual citizens as well as those who are directly affected by the regime aware of the situation and thereby gather much more support for our efforts. Our ultimate goal is to contribute to the safety and peace of national life, and to the integrity and development of the international financial system, which is the very objective of the Act on Prevention of Transfer of Criminal Proceeds.

(Note)

All administrative work to implement the Act on Prevention of Transfer of Criminal Proceeds is undertaken by the Japan Financial Intelligence Center (JAFIC), which serves as Japan's FIU.

February, 2014

國枝 治男

Haruo Kunieda

Director for Prevention of Money Laundering