## 4 Identification 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 some factors including the nature of transactions or types of customers. In other words, specified business operators should determine whether the transactions are suspected of being related to ML/TF in the context of each transaction conducted. However, not all of them identify ML/TF risks in every transaction and they may find it difficult to make an appropriate determination. Therefore, competent administrative authorities that oversee specified business operators have announced "reference cases of suspicious transactions," based on the characteristics of respective specified business operators. These reference cases are provided as a reference to help specified business operators find or identify suspicious transactions in their day-to-day operations. Although all the transactions that appear to match the listed samples in the reference cases do not necessarily have to be reported as suspicious, any transaction that specified business operators determine as should be reported.

As a result of the amendment of the Act on Prevention of Transfer of Criminal Proceeds in 2014, a provision concerning judgment related to suspicious transaction reporting was introduced to require that specified business operators make judgment as to whether or not to submit a suspicious transaction report under a method prescribed by the competent ministry's relevant ordinance 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.

It is also required that the National Risk Assessment of Money Laundering and Terrorist Financing describe the risk level of the transfer of criminal proceeds, etc. by type of transaction conducted by the specified business operator and that the report be annually compiled and published by the National Public Safety Commission.

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 its promulgation (November 27, 2014) and other provisions are required to be put into force on a day prescribed by a relevant Cabinet Order that is not later than two years from the day of promulgation.

## 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 and 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 transaction information, 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