## 1 Amendment of the Act on Prevention of Transfer of Criminal Proceeds

## (1) Backgrounds to the amendment

In 2011, the Act on Prevention of Transfer of Criminal Proceeds was amended in light of the matters pointed out in the third-round FATF mutual evaluation of Japan (refer to Chapter 6, Section 1) in 2008 and the status of money laundering cases. However, after this amendment, the FATF pointed out that some matters concerning the customer due diligence required by the FATF recommendations are not explicitly prescribed in laws and regulations, and in June 2014, it published a statement encouraging Japan to quickly address deficiencies concerning anti-money laundering measures.

In light of changes in the circumstances surrounding money laundering, including the results of the third-round FATF mutual evaluation of Japan and the revised FATF recommendations, the National Police Agency convened meetings of the Advisory Panel of Experts (chairman: Kiyoshi Yasutomi, professor emeritus of Keio University) in order to study this matter. As a result, in October 2014, a bill to partially amend the Act on Prevention of Transfer of Criminal Proceeds was submitted to the 187th Diet session. This bill was enacted on November 20 and the amended law was promulgated on November 27. The provision of the amended act that concerns the compilation of the National Risk Assessment of Money Laundering and Terrorist Financing was put into force on the day of promulgation, and other provisions will be put into force on a day prescribed by a Cabinet Order that is not later than two years from the day of promulgation.

## (2) Key points of the amendment

A. Clarification of the method of making determination related to suspicious transactions

Specified business operators (excluding judicial scriveners, etc.) are required to make determination as to whether to file an STR under a method prescribed by the ordinance of the competent ministries while taking account of the contents of the National Risk Assessment of Money Laundering and Terrorist Financing in addition to the results of verification at the time of transactions and other factors.

Meanwhile, the National Public Safety Commission is required each year to investigate and analyze the status of ML/TF, including modus operandi related to the transfer of criminal proceeds, and compile and publish the National Risk Assessment of Money Laundering and Terrorist Financing that describes the investigation and analysis results, including the risk level of ML/TF such transactions by type of transaction conducted by specified business operators and other business operators.

### B. Strict verification at the time of conclusion of a correspondent banking contract

When concluding a correspondent banking contract under which exchange transactions with an exchange business operator located abroad are conducted continuously or repeatedly, specified business operators (limited to those who conduct exchange transactions on a regular basis) are required to verify that the foreign exchange business operator located abroad has developed a system necessary for appropriately implementing a measure equivalent to verification at the time of transactions.

(Note) A correspondent banking contract is concluded by a Japanese financial institution with a foreign financial institution with regard to deputy work related to exchange business for the purpose of