Silviase/jgov_v1.4_full_ann huggingface dataset:
Headquarters for the Promotion of Measures Against Transnational Organized Crime and International Terrorism" decided that the National Police Agency would make a draft of a law for implementation of the re-revised Recommendations and that the FIU would be transferred from the Financial Services Agency to the National Public Safety Commission / the National Police Agency.

The National Police Agency drafted a bill in cooperation with relevant ministries and agencies and submitted it to the 166th National Diet session in February 2007. "The Act on Prevention of Transfer of Criminal Proceeds" was then adopted in March of that year. A part of the law, stipulating the transfer of the FIU, etc. was enforced in April of the same year, while the remaining part of the law, e.g. the extension of the scope of business operators, was enforced on March 1, 2008.
History of Anti-Money Laundering Measures

Global Events	Events in Japan
December 1988	Adoption of "UN New Narcotics Convention" (Criminalization of money laundering activities related to illegal prpceeds obtained from drug crimes .)
July 1989	Arch Summit (Establishment of the FATF (Financial Action Task Force on Money Laundering))
April 1990	FATF issued "the 40 Recommendations" - Customer identification by financial institutions - Reporting of suspicious transactions to financial regulatory authorities	June 1990Notices issued on the requirement of customer identification, etc. (by the Director-General of the Banking Bureau, Ministry of Finance and others)
June 1996	FATF revised "the 40 Recommendations" - Extending the scope of predicate offences to serious crimes became compulsory.	July 1992Enforcement of "the Anti-Drug Special Law" (Creation of the "Suspicious transaction report" system relating to drug crimes)
May 1998	Birmingham Summit (Agreement on establishment of FIU)	February 2000Enforcement of "the Organized Crimes Punishment Law" (Extension of the scope of predicate offences to certain serious crimes, establishment of the Japanese version of FIU, etc.)
September 2001	Terrorist attacks in the US
October 2001	FATF issued "Special recommendations on terrorist financing" - Criminalization of terrorist financing, Reporting of terrorist financing-related suspicious transactions.	July 2002With the enforcement of "the Act on Punishment of Financing to Offences of Public Intimidation" and "the revised Organized Crimes Punishment Law", terrorist financing offence was added to predicate offences.
June 2003	FATF re-revised "the 40 Recommendations" - Application of recommendations to non-financial businesses (real estate agents, dealers in precious metals, dealers in precious stones, etc.) and professionals (lawyers, accountants, etc.)	January 2003Enforcement of "the Customer Identification Act" (Obligation of identification of customers etc. by financial institutions, etc. is legislated.)
December 2004"The Headquarters for Promotion of Measures Against Transnational Organized Crime and International Terrorism" created the "Action Plan for Prevention of Terrorism".
November 2005"The Headquarters for Promotion of Measures Against Transnational Organized Crime and International Terrorism" decided on "the Development of laws for implementation of the FATF recommendations"
March 2007Adoption of "the Act on Prevention of Transfer of Criminal Proceeds"
April 2007Transfer of the FIU (from the Financial Services Agency to the National Public Safety Commission / the National Police Agency)
March 2008Enforcement of the application of customer identification obligation, etc. to non-financial business operators etc
As described in the preceding chapter, legal systems on money laundering both in Japan and foreign countries have realized a gradual development since the 1980s and generally contain the following three elements:

(1) Criminalization of money laundering

(2) Confiscation of criminal proceeds

(3) Obligation of a certain range of business operators to take preventive measures such as customer due diligence.

Among these standards, (1) and (2) are aimed at the direct effects of weakening, in particular, the financial foundations of criminal organizations to target assets generated through crimes, while (3) is aimed at preventing money laundering itself by making it easier to trace the transfer of illegal funds and making it more difficult to avoid prosecution and confiscation.

In Japan the standards (1) and (2) above are realized mainly by the Anti-Drug Special Law and the Organized Crimes Punishment Law, and the standard (3) is realized by the Act on Prevention of Transfer of Criminal Proceeds. This chapter gives you an outline of these laws centered on the Act on Prevention of Transfer of Criminal Proceeds, of which JAFIC plays an important part in terms of enforcement.

For your information, the texts of these laws are attached at the end of the report.

Fig. 2-1 Relationships of the Act on Prevention of Transfer of Criminal Proceeds, the Organized Crimes Punishment Law, and the Anti-Drug Special Law

Assure the safety and peace of national life

Assure the sound development of economic activities

Prevent the transfer of criminal proceeds by punishing money laundering

Confiscate criminal proceeds or the like

Act on Prevention of Transfer of Criminal Proceeds

Provisions on preventing transfer of criminal proceeds

Provisions on

controlling

criminal

proceeds

Customer identification / Preparation and preservation of transaction records, etc.

Reports of suspicious transactions

Organized Crimes Punishment Law

Punishment of money laundering

Managing enterprises etc. with illegal proceeds or the like

Concealment of criminal proceeds (including drug crime proceeds)

Confiscation of proceeds

Confiscation Collection of equivalent value Securance order for confiscation or collection of equivalent value
## Section1

# Outline of the Anti-Drug Special Law and the Organized Crimes Punishment Law

## 1 | Anti-Drug Special Law

As described in Chapter 1, the Anti-Drug Special Law was enacted for the purpose of blocking cycles of illegal proceeds derived from drug crimes, directly triggered by the UN New Narcotics Convention adopted in 1988 and the FATF "40 Recommendations" issued in 1990, and enforced on July 1, 1992. This law contains two items with regard to measures against drug crime proceeds as below.

Anti-Drug Special Law included, at the time of enactment, provisions on reports of suspicious transactions, which have been taken over to the Act on Prevention of Transfer of Criminal Proceeds through the Organized Crimes Punishment Law.

## (1) Punishment of money laundering

The Anti-Drug Special Law defines the act of money laundering as a new crime in that it has such aspects as encouraging further (drug) crimes.

a. Crime of concealment of drug crime proceeds, etc. (Article 6)

The following acts are criminalized by this article: (i) Act of "disguising facts with respect to acquisition or disposition of drug crime proceeds etc." (ii) Act of "concealing drug crime proceeds, etc." and (iii) Act of "disguising facts with respect to the source of drug crime proceeds, etc."

Examples of the act (i), "Act of disguising facts with respect to acquisition" are the act of depositing drug crime proceeds, etc. under the name of a third party, the act of manipulating the book by pretending profits have been gained by legal business activities, or the like.

An example of the act (i), "Act of disguising facts with respect to disposition" is the act of purchasing goods under the name of a third party, using drug crime proceeds etc., or the like.

Examples of the act (ii), "concealing" are actions such as physically concealing money or goods (e.g. in the trunk room of a car) and sending money to a country or region where it is considerably difficult to trace the funds, or the like.

An example of the act (iii), "Act of disguising facts with respect to the source" is the illegal drug's purchaser's act of pretending the payment for purchase is a repayment of a fictitious debt.

b. Crime of receipt of drug crime proceeds, etc. (Article 7)

The act of "knowingly receiving drug crime proceeds, etc." is criminalized by this article. For example, an act in which a main member of Boryokudan group receives money as part of a protection racket, knowing that the money has been obtained from drug crime.

## (2) Confiscation, collection of equivalent value and securance measures (Article 11 through 13, 19)

Drug crime proceeds shall be confiscated. If it cannot be confiscated because, for example, it has already been consumed or the right thereof has been transferred, collection of equivalent value will be ordered. The system of confiscation and collection of equivalent value provided in Anti-Drug Special Law has been strengthened compared to the existing system of
## 3 | Responsibilities of the National Public Safety Commission and FIU (Article 3)

The Act on Prevention of Transfer of Criminal Proceeds 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 take appropriate actions, 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 criminal investigation and related international cooperation.

Government organs that perform collection, arrangement and analysis of suspicious transaction reports and disseminate them to investigative authorities are generally called FIUs (Financial Intelligence Units). Japanese FIU used to belong to Financial Services Agency. Under the new law, National Public Safety Commission took over this function from the Financial Services Agency, in connection with the extension of the scope of specified business operators. For this purpose, the Japan Financial Intelligence Center (JAFIC) was established in the National Police Agency, in charge of police administration under the control of the National Public Safety Commission, on April 1, 2007.

In May 2007, JAFIC became a member of the Egmont Group, an international framework aiming at communication between FIUs.

The outline of the structure of JAFIC will be detailed in Chapter 3.

Fig. 2-2 Responsibilities of the National Public Safety Commission (Article 3 of the Act on Prevention of Transfer of Criminal Proceeds)

Support such as provision of information on modus operandi, contributing to the implementation of measures by specified business operators, and enhancement of public awareness

Collection, arrangement and analysis of information on criminal proceeds contributing to criminal investigation and international exchange of information

Functions of FLU

## 4 | Measures by Specified Business Operators

By the law, specified business operators are obliged to conduct the following:

(1) Identification of customers (Article 4)

In conducting a certain transaction, they should verify identification data of a customer such as the name and domicile by asking for his/her driver's license or other identification documents;

(2) Preparation and preservation of customer identification records (Article 6)

They should prepare and keep the record of identification data and measures taken for customer identification etc. for seven years;

(3) Preparation and preservation of transaction records etc. (Article 7)

They should prepare and keep the record of the date and contents etc. of transactions for seven years;
## (4) Reports of suspicious transactions (Article 9)

They should report transactions that are suspected of being related to criminal proceeds, with exception for judicial scriveners, administrative scriveners, certified public accountants, certified tax accountants and lawyers;

## (5) Notification pertaining to foreign exchange transactions (Article 10)

In conducting a cross-border payment, they should notify the receiving institutions of certain items such as the name and the account number. This article is applied only to financial institutions that can conduct exchange transactions;

## (6) Measures by lawyers (Article 8)

Measures to be taken by lawyers are governed by the provisions established in the Rules of the Japan Federation of Bar Associations, the contents of which should follow the examples of judicial scriveners etc.

These measures are classified by the types of business operators in Table 2-1. Also, "Specified Business Affairs" subject to obligations and "Specified Transactions" subject to customer identification obligation are listed in Table 2-2.

Customer identification, preparation and preservation of customer identification records and transaction records described in (1) through (3) above are expected to work as warnings against persons who attempt to transfer criminal proceeds and to enable tracing proceeds afterwards. Suspicious transaction reports described in (4) will be used for investigations into money laundering crimes and predicate offences and will prevent criminals from abusing economic and financial systems and assure its soundness.

The purpose of notification pertaining to foreign exchange transactions described in (5) is to enable tracing funds internationally and also respond to the FATF Special Recommendations regarding terrorist financing.
Table 2-1 Measures of specified business operators obliged by the law

Specified Business Operators (Paragraph 2 of Article 2)	Identification of customers (Article 4)	Preparation and preservation of customer identification records (Article 6)	Preparation and preservation of transaction records (Article 7)	Reports of suspicious transactions (Article 9)
Financial institutions, etc. (Item 1 through 33)
Finance leasing operators (Item 34)
Credit card operators (Item 35)
The real estate transaction business operator (Item 36)
Business operators dealing with jewelry, precious metals or the like (Item 37)
Business operators providing a service of receiving postal items (Item 38)
Business operators providing a service of receiving telephone calls (Item 38)
Judicial scrivener (Item 40)
Administrative scrivener (Item 41)
Certified public accountant (Item 42)
Certified tax accountant (Item 43)
Lawyer (Item 39)	To be stipulated in the Rules of the Japan Federation of Bar Associations following the examples of judicial scriveners or the like (Article 8)
## 5 | Dissemination of Information on Suspicious Transactions (Article 11 and 12)

In order to make use of information on suspicious transactions for domestic and overseas investigation etc., the National Public Safety Commission may disseminate information to authorities in charge of investigating criminal cases such as a public prosecutor, and to a foreign FIU under certain conditions. The STR regime is detailed in Chapter 4 (Reports of Suspicious Transactions) and Chapter 5 (Promotion of International Cooperation).

## 6 | Supervisory Measures (Article 13 through 17, 23, 27)

The law grants inspection power to competent administrative authorities so that they can detect irregularities by specified business operators. The authorities can also employ various supervisory methods such as guidance, advice, suggestion, and remedy order in the case of violation for a better compliance by specified business operators. A person who violates a remedy order may be punished with imprisonment with labor for not more than two years or a fine of not more than three million yen.

Moreover, to complement supervisory function, the National Public Safety Commission is granted the authority to state its opinion to competent administrative authorities (and make necessary inspections on business operators) when it detected violations.

## 7 | Enforcement Date

The part of the law related to FIU functions such as responsibilities of the National Public Safety Commission came into force on April 1, 2007, while the remainder on March 1, 2008.

Competent administrative authority

Reporting of suspicious transactions (STRs)(Note 1)

Identification of a customer or the like, preparation and preservation of customer identification records and transaction records etc.

Financial institution (Note 3), Finance leasing operator, Credit card operator,

Building lots and buildings transaction business operator, Business operator dealing with jewelry, precious metal or the like, Business operator providing a service for receiving postal mail, Business operator providing a service for receiving telephone calls

Judicial scrivener

Administrative scrivener

Certified public accountant

Certified tax accountant

Note 1: Lawyers, judicial scriveners, administrative scriveners, certified public accountants and certified tax accountants are not subject to the obligation of suspicious transaction reporting.

Note 2: Measures by lawyers corresponding to the measures of customer identification, preparation and preservation of customer identification records and transaction records shall be stipulated by the provisions established in the Rules of the Japan Federation of Bar Associations following the examples of judicial scriveners etc. set forth by the Act on Prevention of Transfer of Criminal Proceeds.

Note 3: Among financial institutions, business operators involved in exchange transactions are obliged to notify information on money senders.
# Chapter3 Establishment of JAFIC and Police Activities

On April 1, 2007, the JAFIC (Japan Financial Intelligence Center) was established within the Organized Crime Department of the National Police Agency at the same time that first tier of 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. Intelligence acquired through this process is disseminated as appropriate to investigative authorities. As shown in the structure of the Act on Prevention of Transfer of Criminal Proceeds, cooperation of the public, especially business operators is indispensable for JAFIC to exercise its function.

This chapter summarises the structure of JAFIC and the work of the police, as well as relevant activities performed by related institutions, business operators and others.

## Section1 Background

Many countries have an equivalent institution 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 Law in July 1992, it did not centralize the information. Japan's first FIU was established within the Financial Supervisory Agency (reorganized into the Financial Services Agency in July 2000), when the Organized Crimes Punishment Law came into effect in February 2000.

In connection with the extension of the scope of business operators required to take anti-money laundering measures (i.e., building lots and buildings transaction business operators and business operators dealing with jewelry, precious metals etc. were added to financial institutions etc.), elements of STRs were to be extended as well. Therefore, the function of FIU, which handles and analyzes STRs, was not as suited for the Financial Services Agency, which supervises financial institutions, as the national police agency, which makes use of overall reported information for investigations and countermeasures against organized crimes as well as terrorism. 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 handling of STRs including provision of them to foreign FIUs as well as a function of quasi-supervisory measures against specified business operators. JAFIC (Japan Financial Intelligence Center) was created within the Organized Crime Department, Criminal Investigation Bureau of the National Police Agency, as a new Japan's FIU to perform these functions.

## Section2 Mission and Structure

JAFIC is in charge of the following tasks provided in the Act on Prevention of Transfer of Criminal Proceeds:

- Collection, arrangement, analysis and dissemination to investigative authorities etc. of suspicious transaction reports;

- Dissemination of information to foreign FIUs;

- Provision of information and complementation of supervisory measures to ensure that specified business operators take required measures;

JAFIC also plans and examines the legal system related to AML/CFT and gives various directions to nationwide police forces including "the Guideline for Promotion of the Criminal Proceeds Control", described in Section 4, and participates in establishing international standards.

Among these tasks, the status of the analysis and dissemination of STRs will be explained in Chapter 4, while cooperation with foreign FIUs and international institutions will be described in Chapter 5.

The structure of JAFIC is illustrated by Fig. 3-1. It is currently composed of about 40 employees under the Director.

On the other hand, the "Task Force specializing in investigation of money laundering" is established in each Prefectural Police Force, based on the below-mentioned "the Guideline for Promotion of the Criminal Proceeds Control", to further analyze flows of illegal funds and eliminate them from organized criminal groups.
## Section3 JAFIC and Partners

The Act on Prevention of Transfer of Criminal Proceeds provides that specified business operators including financial institutions should take initial anti-money laundering measures. As stated in this chapter separately, in addition to analysis and dissemination of financial intelligence, JAFIC endeavors to make public actual conditions of money laundering and relevant countermeasures in order that specified business operators take proper actions. Relevant ministries and agencies in charge of supervising business operators issue guidelines for STRs, give seminars in cooperation with industry organization, and exercise the supervisory function to secure a fulfillment of obligations. On the other hand, investigative authorities, such as the police, detect money laundering crimes and predicate offences and, as a result, confiscate criminal proceeds within their respective jurisdictions.

Ministries and agencies carry out their duties in each position, while also cooperating with each other by exchanging useful information, discussing issues in preventing money laundering and other ways.

Also, for the purpose of promoting effective and appropriate measures against transnational organized crimes and international terrorism in a comprehensive and active manner, the "Headquarters for the Promotion of Measures against Transnational Organized Crime and Other Relative Issues and International Terrorism" has been established in the Cabinet since August 2004. In addition, the "Ministerial Meeting Concerning Measures against Crime" started by a cabinet meeting agreement on September 2003 frequently discusses anti-money laundering measures.