# 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 from 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 is indispensable for JAFIC to exercise its function.

## Section1 Background of Establishment of JAFIC

Many countries have an institution equivalent to JAFIC. These 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 suspicious transaction reporting 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 has the responsibility to handle information on suspicious transaction and exchange information with foreign counterparts under this Act.

In connection with the Act, the extension of the scope of business operators required to take anti-money laundering measures (expanded from financial institutions to real estate agents and the dealers in precious metals and stones.), elements of STRs were to be extended as well. Therefore, it is thought that the function of FIU, which handles and analyzes STRs is suited for National Police Agency, which makes use of overall reported information for investigation and countermeasures against organized crime as well as terrorism rather than the Financial Services Agency, which supervises financial institutions.

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 formulate the bill of the new AML/CFT law (the Act on Prevention of Transfer of Criminal Proceeds). 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. It granted to the NPSC a function related to the handling of STRs including their dissemination to foreign FIUs as well as a function of complementary measures against specified