Silviase/jgov_v1.4_full_ann huggingface dataset:
gence, a bill for partial amendment of the Act on Prevention of Transfer of Criminal Proceeds was submitted to the 187 $ ^{th} $ Diet session and was enacted in November of the same year. The amended bill included provisions for clarification of the judgment method of suspicious transactions, strict verification at the time of the conclusion of correspondence contracts and expansion of the obligation for business operators to make efforts to develop necessary systems.

The National Police Agency, together with other relevant government ministries and agencies, has as appropriate amended AML/CFT-related legislation including the Act on Prevention of Transfer of Criminal Proceeds and its subordinate decrees as well as various other ordinances, thereby appropriately responding to changes in social conditions and addressing the deficiencies identified in the FATF Mutual Evaluation Report (MER) of Japan.
# Section 3 Establishment of the Japan Financial Intelligence Center (JAFIC)

## 1 History of Flu in Japan

In other countries as well, there are organizations equivalent to the Japan Financial Intelligence Center, which are usually called FIUs. Egmont Group, established in 1995 as a forum for exchanging information between FIUs, defines an FIU as a "central, national agency responsible for receiving and analyzing information reported by financial institutions and providing such information to the competent authorities to support the government's anti-money laundering measures; it shows a way for exchanging information that is important for law enforcement agencies."

In Japan, although suspicious transaction reporting became obligatory due to the enforcement of the Anti-Drug Special Provisions Law in 1992, a mechanism for centralized management and provision of information to investigative authorities was not created. However, following the enforcement of the Act on Punishment of Organized Crimes in 2000, the first FIU in Japan was established under the Financial Supervisory Agency (later reorganized as the Financial Services Agency) in order to process information related to suspicious transactions and exchange information with foreign countries in accordance with the provisions of the same law.

In 2003, the FATF revised the 40 Recommendations again, expanding the scope of businesses subject to the obligation for implementing such measures as verification of customers' identity beyond financial institutions, and in light of this, Japan also decided to expand the scope of businesses subject to the obligation for implementing measures to prevent money laundering beyond financial institutions to real estate agents, dealers in precious metals and stones and other business operators. As the scope of information related to suspicious transactions was expanded accordingly, it was determined that it was appropriate to shift the authority over the FlU functions, most of which concern analysis, from the Financial Services Agency, which supervises financial institutions, to the police, which use reported information in general for investigation and countermeasures against organized crimes and terrorism. This thinking was revealed by the decision made in November 2005 by the government's Headquarters for the Promotion of Measures against Transnational Organized Crime and International Terrorism to have the National Police Agency write a bill for the implementation of the FATF recommendations.

The Act on the Prevention of Transfer of Criminal Proceeds, which was partially put into force in April 2007, made it clear that the National Public Safety Commission (NPSC), which exercises administrative supervision over the National Police Agency and is aided by it, is responsible for prompt and appropriate collection, arrangement and analysis of suspicious transaction reports (STRs) filed by specified business operators. The Act also granted the NPSC a function related to the handling of STRs including its dissemination to foreign FlUs as well as a function to complement supervisory measures against specified business operators.
The Japan Financial Intelligence Center (JAFIC) was established within the Organized Crime Department, the Criminal Affairs Bureau of the National Police Agency, as an organization responsible for processing administrative work related to the enforcement of the same law. In April 2014, the Strategy-Planning and Analysis Division and JAFIC, which were until then under the Organized Crime Department, were integrated, and the Organized Crime Policy Planning Division was established under the department, and the Japan Financial Intelligence Center was established under the division. The Japan Financial Intelligence Center is internationally called JAFIC.

## 2 Mission and Structure

JAFIC is tasked with the following works in accordance with the Act on Prevention of Transfer of Criminal Proceeds.

· Investigation and analysis of the status of transfer of criminal proceeds and formulation of an investigative report on the risk level of transfer of criminal proceeds

· Collection, arrangement, analysis and dissemination of information on suspicious transactions to investigative authorities etc.

· Dissemination of information to foreign FlUs;

· Provision of information and complement of supervisory measures by administrative authorities to ensure that specified business operators take required measures;

JAFIC also plans and examines the legal system related to AML/CFT and various measures such as “the Guideline for Promotion of the Criminal Proceeds Control”. It also participates in various international AML/CFT standard setting activities.

The structure of JAFIC is illustrated in Fig. 1-2. It is currently composed of about 100 employees under the Director for Prevention of Money Laundering.

On the other hand, the “Task Force for fact-finding concerning criminal proceeds” is established in each Prefectural Police in charge of tracing criminal proceeds and investigating money laundering and other crimes.
Figure 1-2 Structure of JAFIC

## 3 Partners

Specified business operators should take initial measures against anti-money laundering and terrorist financing according to the Act on Prevention of Transfer of Criminal Proceeds. In addition to the analysis of financial information, JAFIC endeavors to get across knowledge or ideas it has accumulated with regard to the actual conditions of money laundering or legal systems and relevant countermeasures so that specified business operators can perform CDD in better harmony with the general public. Relevant ministries and agencies in charge of supervising business operators not only exercise the supervisory function to secure the fulfillment of obligations, but also provide support by issuing Lists of Reference Cases of Suspicious Transactions and holding seminars together with industry organizations. On the other hand, investigative authorities such as police, make contributions in the area of punishment of money laundering or predicate offences or confiscation of their proceeds.

These ministries and agencies carry out their duties in each position in cooperation with each other by sharing useful information, discussing issues in preventing money laundering and other ways.

For the purpose of promoting effective and appropriate measures against transnational orga-
nized crimes and international terrorism in a comprehensive and active manner, the “Head-quarters for the Promotion of Measures against Transnational Organized Crime and International Terrorism” was established in a Cabinet Meeting in August 2004.

Figure 1-3 Anti-money Laundering Measures in Organization

## 4 Guideline for Promotion of the Criminal Proceeds Control

From the perspectives of damaging the financial bases of criminal organizations, the police have been promoting countermeasures against criminal proceeds by, among others, cracking down on illegal acts and other fund raising activities undertaken by Boryokudan. The Act on the Prevention of Transfer of Criminal Proceeds is expected to make these countermeasures more effective with the cooperation of a wide range of business operators who may deal with criminal proceeds. The National Police Agency, playing a central part in enforcing the act, issued “the Guideline for Promotion of the Criminal Proceeds Control” with the notice of the Deputy Commissioner General of the National Police Agency in April 2007 with a view to enhancing countermeasures against criminal proceeds taken by police departments across the country.

Fundamental items in carrying out measures against criminal proceeds indicated by “the Guideline for Promotion of the Criminal Proceeds Control” are composed of four core principles, six key areas and confidentiality of STR information as follows:
## 1 Core Principles for AML/CFT

(1) Promotion of voluntary efforts by specified business operators and of public awareness

(2) Analysis and utilization of information on criminal proceeds

(3) Promotion of crackdown on crimes related to criminal proceeds and deprivation of criminal proceed

(4) Promotion of international cooperation on criminal proceeds control

## 2 Key areas

(1) Arrangement of the system for the promotion of countermeasures

The National Police Agency and each prefectural police should develop a system necessary for countermeasures against criminal proceeds. Each prefectural police establish a Task Force for fact-finding concerning criminal proceeds and develop the investigation system for crimes related to criminal proceeds in each relevant division.

(2) Promotion of voluntary efforts by specified business operators and public awareness

The National Police Agency should provide information on the transfer of criminal proceeds and on implementation methods for the measures prescribed in the Act on Prevention of Transfer of Criminal Proceeds, instruction and advice to specified business operators. The National Police Agency and each prefectural police force should conduct public relations and educational activities to deepen general understanding about importance of criminal proceeds control.

(3) Collection, arrangement and analysis of information on criminal proceeds

The National Police Agency should collect, arrange, analyze and disseminate information on criminal proceeds. Each prefectural police should collect the information necessary for effective countermeasures against criminal proceeds by maintaining close cooperation among relevant divisions.

(4) Promotion of countermeasures against criminal proceeds

The National Police Agency should provide instruction to and coordinate among prefectural police departments which investigate crimes related to criminal proceeds, as well as clarify actual conditions of criminal organizations etc. In order to cut off the source of funds for criminal organizations etc., each prefectural police department should promote investigation where STRs are utilized, and attempt to make arrests in a proactive manner by applying the Act on Punishment of Organized Crimes, the Anti-Drug Special Provisions Law and other laws, while it should also promote information collection activities.

## (5) Promotion to deprive Criminal Proceeds

Each prefectural police force shall carry out measures to prevent the transfer of criminal proceeds by not only arresting suspects, but also by detecting criminal proceeds and utilizing the temporary restriction order before institution of prosecution. Also, close coordination with the Public Prosecutor's Office shall be further strengthened with regards to the deprivation of criminal proceeds.

## (6) Promotion of international cooperation

The National Police Agency should take initiative in the areas of, for example, inter-FUL
information exchange, compliance with the FATF Recommendations, and support the global compliance in an effort to enhance international cooperation on AML/CFT.

## 3 Confidentiality

Necessary and appropriate measures have to be taken to ensure confidentiality and prevent any leakage with regard to any use of STR information in any phase of their duties.

Figure 1-4 Overview of the Guideline for Promotion of the Criminal Proceeds Control

Guideline for Promotion of the Criminal Proceeds Control

## National Police Agency

Support for and PR/enlightenment of voluntary efforts of specified business operators

Collection, arrangement and analysis of information on criminal proceeds

Promotion of International coordination and cooperation

Ensuring confidentiality and information security

Dissemination of information and investigative instruction/coordination

Report of information necessary for promoting countermeasures against criminal proceeds

## Prefectural Police

Establishment of Task Force for fact-finding concerning criminal proceeds

Development of investigative structure for crimes related to criminal proceeds

Promotion of investigation utilizing STRs

PR and enlightenment activities

Appropriate implementation of measures to confiscate criminal proceeds

Collection of information for promoting countermeasures against criminal proceeds

Ensuring confidentiality and information security
# Legislative Regime on AML/CFT

AML/CFT regime in Japan has been developed since the 1980s, in order to achieve the following three objectives:

(1) Imposing CDD and other necessary obligations on financial institutions and DNFBPs (collectively referred to as "specified business operators")

(2) Criminalization of money laundering

(3) Confiscation of criminal proceeds

Of these, (1) is intended to deter money laundering by facilitating the tracing of criminal proceeds when they are transferred and making it difficult to avoid prosecution or confiscation, while (2) and (3) are primarily targeting criminal organizations to root out their sources of fund.

(1) is realized mainly by the Act on Prevention of Transfer of Criminal Proceeds, while (2) and (3) are realized by the Act on Punishment of Organized Crimes and the Anti-Drug Special Provisions Law.

Figure 2-1 Relationships of the Act on Prevention of Transfer of Criminal Proceeds, Act on Punishment of Organized Crimes, and the Anti-Drug Special Provisions Law
# Section 1 Outline of the Act on Prevention of Transfer of Criminal Proceeds

The Act on Prevention of Transfer of Criminal Proceeds was created based on the two laws; the amended Customer Identification Act and a portion of the Act on Punishment of Organized Crimes in order to address changes in money laundering trends more effectively and comprehensively in a way consistent with global standards set out by the FATF 40 Recommendations in 2003.

The Act provides for preventive measures in combating money laundering and terrorist financing, by imposing obligations on specified business operators to perform CDD, record keeping, filing STRs, etc. In 2011, the following amendments were made to the Act: addition of verifying details for transactions; addition of telephone forwarding service providers to the list of specified business operators; addition of measures for appropriate verification at the time of transactions; and increased punishments on illicit transfer of passbooks, etc. The amended Act was fully enforced on April 1, 2013.

In addition, in November 2014, a legal amendment intended to clarify the method of making determination pertaining to suspicious transactions, etc. (refer to Section 3) was made, and the provisions concerning the compilation and publication of the National Risk Assessment of Money Laundering and Terrorist Financing by the National Public Safety Commission was put into force on the day of the promulgation of the amended Act.

The following few sections will explain the important parts of the Act.

The fundamental structure of the Act is described in Fig. 2-2.

## 1 Purpose of the Act (Article 1)

The purpose of the Act is to prevent the transfer of criminal proceeds and to ensure the appropriate enforcement of international treaties, etc., concerning the prevention of terrorist financing and thereby, to ensure the safety and peace of national life and to contribute to the sound development of economic activities by way of devising such measures as the verification of customer identification data, preservation of transaction records or the like, and reporting of suspicious transactions by a specified business operator, as described in 3, coupled with other measures stipulated by the Act on Punishment of Organized Crimes and the Anti-Drug Special Provisions Law.

## 2 Criminal Proceeds (Paragraph 1 of Article 2)

The term “criminal proceeds” as used in the Act means criminal proceeds etc. prescribed in Article 2, paragraph 4 of the Act on Punishment of Organized Crimes or drug-related criminal proceeds etc. prescribed in Article 2, paragraph 5 of the Anti-Drug Special Provisions Law.

## 3 Specified Business Operators (Paragraph 2 of Article 2)

Any financial institution or DNFBP which falls under the Act and thus is required to perform CDD and other obligations, should be called “Specified business operator,” whose designa-
Figure 2-2 Overview of the Act on Prevention of Transfer of Criminal Proceeds

※ 1 Amongst financial institutions etc., those operators involved in foreign exchange are required to provide notification on money remitters in addition to the above.

$ ^{*} $ 2 Professions such as judicial scriveners, certified administrative procedure specialists, certified public accountants, and certified tax accountants are required to verify the information in ①only.

$ ^{*} $ 3 The Japan Federation of Bar Associations defines, in its bylaws, measures to ensure accurate verification on transactions, and preparation/preservation of verification records and transaction records by lawyers. These rules are based on examples of judicial scriveners and other professions contained in the Act on Prevention of Transfer of Criminal Proceeds.

tion would occur in line with the FATF standards and also the domestic business context. At the time when the Act was enforced, nevertheless, it had already been put in place that financial institutions performed customer identification under the Customer Identification Act and its related regulations.

## Specified business operators

○Financial institutions (item 1 through 36):

Bank; Shinkin bank; Federation of Shinkin banks; Labor bank; Federation of labor banks; Credit cooperative; Federation of credit cooperatives; Agricultural cooperative; Federation of agricultural cooperatives; Fishery cooperative; Federation of fishery cooperatives; Fishery processing cooperative; Federation of fishery processing cooperatives; Norinchukin Bank; Shokochukin Bank; Development Bank of Japan; Insurance company; Foreign insurance company, etc.; Small-claims/short term insurance business operator;
Federation of fishery cooperatives for mutual aid; Financial instruments business; Securities finance company; Specially permitted business notifying person; Trust company; Self-trusteed companies; Real estate specified joint enterprise operator special business operators; Mutual loan company; Money lender; Call money market broker; Fund transfer companies; Futures commission merchant; Book-entry, transfer institution; Account management institution; electronic receivables recording organizations; Management Organization for Postal Savings and Postal Life Insurance; Currency exchanging operator

○Financial leasing operator (item 37)

○Credit card operator (item 38)

○Real estate agents (item 39)

○Dealers in precious metals and stones (item 40)

○Postal receiving service providers, telephone receiving service, providers and telephone forwarding service providers (item 41)

○Lawyer or legal profession corporation (item 42)

○Judicial scrivener or judicial scrivener corporation (item 43)

○Certified administrative procedures specialists or administrative scrivener corporation (item 44)

○Certified public accountant or audit firm (item 45)

○Certified public tax accountants or certified tax accountant corporation (item 46)

## 4 Responsibilities of the National Public Safety Commission and FlU (Article 3)

The Act provides that the National Public Safety Commission has responsibilities to endeavor 1) to enhance public awareness on the importance of the prevention of the transfer of criminal proceeds in order to ensure specified business operators conduct appropriate measures in performing CDD, and to provide them with support including the provision of information on the modus operandi; regarding the transfer of criminal proceeds, and 2) to promptly and appropriately collect, arrange and analyze information on criminal proceeds including information on suspicious transactions reported by specified business operators so that such information can be effectively utilized in the investigation into criminal cases and related international cooperation.

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

## 5 Measures by Specified Business Operator

The measures which specified business operators (excluding lawyers; the same shall apply in this section except for 5(7) and Table 2-1) are obligated to implement and the measures