Silviase/jgov_v1.4_full_ann huggingface dataset:
# Chapter6 Money Laundering Trends

In order to take effective AML measures, it is necessary to understand the scale and modus operandi of actual money laundering activities. JAFIC keeps statistics on cases related to money laundering and STRs for this reason. This Chapter deals with cases where money launderers and other criminals were arrested and, as a result of that, deprived of criminal proceeds.

As explained in Chapter 2, the Organized Crimes Punishment Law criminalizes control of enterprises by illicit proceeds (Article 9), concealment of criminal proceeds (Article 10) and receipt of criminal proceeds (Article 11), whereas the Anti-Drug Special Law criminalizes concealment of drug related criminal proceeds (Article 6) and receipt of drug related criminal proceeds (Article 7). Typical money laundering conducts such as remitting criminal proceeds to a place where lax regulations hamper tracing efforts and depositing them into a fictitious account are captured by these provisions. As to confiscation of criminal proceeds, your attention is drawn to a provision of the Organized Crimes Punishment Law, pursuant to which, a police official may, prior to indictment, seek a court order to secure confiscation.

## Section1 Cases Cleared for Money Laundering Offences

## Paragraph1 Cases Cleared for Money Laundering Offences under the Organized Crimes Punishment Law

## 1 | The Number of Cases Cleared

The total number of cases cleared for money laundering offences under the Organized Crimes Punishment Law in 2007 was 177 (43 more than the previous year) made up of 137 cases for concealment of criminal proceeds (46 less than the previous year) and 40 cases of receipt of criminal proceeds (2 less than the previous year). As a result, the total number of cases cleared for money laundering offences since the law came into force is 582.

Figure 6-1 Number of cases cleared for Money Laundering Offences under the Organized Crimes Punishment Law

2000	2001	2002	2003	2004	2005	2006	2007	Total
Management Control by Criminal Proceeds (Article 9)	0	0	0	0	0	0	1	0	1
Concealment of Criminal Proceeds (Article 10)	3 (1)	10 (5)	19 (9)	45 (25)	50 (29)	65 (21)	91 (18)	137 (35)	420 (143)
Receipt of Criminal Proceeds (Article 11)	0	2 (2)	9 (7)	11 (10)	15 (11)	42 (27)	42 (35)	40 (25)	161 (117)
Total	3 (1)	12 (7)	28 (16)	56 (35)	65 (40)	107 (48)	134 (53)	177 (60)	582 (260)

* The numbers in brackets represent the number of cases in which Boryokudan members were involved. (known to the National Police Agency)
Following is the breakdown of these cases by predicate offenses: so-called "black-market finance" offences, i.e. violations of the Capital Subscription Law and the Money Lending Business Law are the most common with 49 cases. Cases relating to fraud, such as "furikome fraud", are 38 and violations of the Anti-Prostitution Law account for 16 cases. Distribution offences of obscene objects follow with 15 cases. Just as in 2006, "black-market finance" offences, frauds, and Anti-Prostitution Law violations are the major types of predicate offences of money laundering; this means that "black-market finance" offenses, frauds, and prostitution management crimes are still major sources of criminal proceeds in Japan. (See Paragraph 2 of this section for information on the number of cases for money laundering offences under the Anti-Drug Special Law)

## 2 | Modus Operandi of Money Laundering Inferred from Cleared Cases

## (1) Examples of Concealment of Criminal Proceeds

In 2007, there were various types of concealment cases, as follows.

- a case in which the settlement system for trade between Japanese and foreign businesses was abused (Case 7)

- a case where suspects disguised criminal proceeds remitted from abroad as a payment for automobile parts sales (Case 8)

- a case where suspects sold properties obtained through theft or fraud under other persons' names

- a case where suspects registered an apartment that they purchased with a housing loan using an illegally obtained another person's resident register card, under that person's name (Case 3)

• cases where suspects concealed cash, which they obtained through criminal acts, in a garage rented under a fictitious name, in a deposit box rented under an assumed name, or in a relative's house

- a case where suspects of fraud deceived victims into sending money to fictitious corporations by using mail receiving service providers (Case 2)

- a case where suspects transferred criminal proceeds from a bank account in the name of another person to another

- a case where a suspect deposited criminal proceeds into his mother's account to purchase stocks

Accounts under others' names are being used for the transfer of funds in various crimes such as "furikome" fraud, internet auction fraud, non-face-to-face illegal drug dealing, "black-market finance" offences, and are still main infrastructure for money laundering.

## (2) Abuse of Accounts Opened at Domestic Financial Institutions in International Money Laundering Cases

In 2007, there was a money laundering case (Case 8) where Nigerians residing in Japan and Japanese citizens were arrested for fraudulently opening a large number of accounts and depositing money therein, knowing that that money is proceeds of fraudulent acts committed in foreign countries. After taking their commission, they were to send the money by wire remittance to other countries. Money obtained from crimes committed abroad by an international criminal syndicate, which significantly threatens world-wide security, was being laun-
dered in Japan. Through assistance from foreign investigative authorities, Japanese police has successfully proved that the proceeds derived from a predicate offence in another country and the suspects had that knowledge. This incident highlights the importance of international cooperation in apprehending money launderers. The National Police Agency of Japan, assuming the function of both the National Central Bureau of Interpol and the Financial Intelligence Unit, finds it ever more urgent to reach agreement on MOUs with foreign FIUs, as well as to improve its intelligence capability at home and abroad.

## 3 | Money Laundering Offences Committed by Boryokudan Members

Among cases cleared for money laundering offences under the Organized Crimes Punishment Law in 2007, those committed by Boryokudan members account for 33.9% of the total 60 cases (7 cases more than the previous year) made up of 35 cases for the concealment of criminal proceeds (17 cases more than the previous year) and 25 cases for the receipt of criminal proceeds (10 cases less than the previous year).

Classification by predicate offenses shows that Boryokudan members commit money laundering in furtherance of various crimes, such as "black-market finances" with 14 cases, Anti-Prostitution Law violations with 13 cases, and fraud with 11 cases, as well as gambling, extortion, theft, distribution of obscene objects, violations of the Trademark Law, violations of the Copyright Law.

## (1) "Black-Market Finance"

Although the punishment for the conduct of the receipt of remarkably high interest as a business was newly provided by the revised Capital Subscription Law enforced in January 2007, Boryokudan members are still widely committing concealment of criminal proceeds from "black-market finance" offenses. Making victims deposit illegal interests into accounts under others' names is typical as a modus operandi of concealment. There was a case in which suspects acquired an account under the name of a construction company and made victims use another company's name and put illegal interests into the said account, in order to avoid police investigation.

[Case 1] (Concealment of criminal proceeds obtained from "black market finance") Boryokudan members affiliated with the Yamaguchi-gumi ran store-less black-market finance, so-called 090 finance, and loaned money to approximately 200 people with interest rates 7 to 100 times higher than legally allowed without registering their businesses. They were arrested under the Organized Crimes Punishment Law (concealment of criminal proceeds) for making customers deposit illegal interests into an account in their possession under another person's name. (November, Kyoto Pref. Police)

## (2) Fraud

### a. "Furikome" Fraud Case

Among the 11 cases cleared for laundering criminal proceeds from fraud committed by Boryokudan members, 5 were related to "Furikome" fraud. The Metropolitan Police Department discovered, in a case it handled in March, that victims were deceived into sending cash by a registered mail to mail receiving service providers under the name of
fictitious corporations. It is inferred from such cases that criminals are searching for money laundering methods in which criminal proceeds are more difficult to be traced, avoiding rigid customer identification measure taken by financial institutions.

## [Case 2] (Concealment of criminal proceeds obtained from "furikome" fraud (fictitious billing fraud))

Associate members of Boryokudan affiliated with the Yamaguchi-gumi were arrested under the Organized Crimes Punishment Law (concealment of criminal proceeds) for making large number of victims send money, around 160 times, of approximately ¥180,000,000 in total, as false membership charges, to the address of mail receiving service providers in the names of multiple fictitious corporations from May 2005 to May 2006, and making victims deposit approximately ¥50,000,000 in total from April to July 2006 into accounts that they had but had been opened under others' names.

(March, Metropolitan Police Department)

b. A case in which real estate purchased with swindled money was registered under the name on a forged basic resident registration card

Boryokudan members, arrested by the Metropolitan Police Department and the Saitama Prefectural Police in February, had obtained from a ward office a resident registration card with his own face on it, assuming the identity of a homeless person, and had registered an apartment under the latter's name. The apartment had also been purchased with a home loan he obtained fraudulently from a financial institution in the name of the assumed person.

### [Case 3](The concealment of criminal proceeds, etc. related to a case of home loan financing fraud)

Boryokudan members affiliated with the Yamaguchi-gumi were arrested for the violation of the Organized Crimes Punishment Law (concealment of criminal proceeds, etc.) for performing a registration of transfer at the register of deeds using a false name in order to conceal the identity of the true owner of a second hand apartment. They had purchased the apartment with funds from a home loan fraudulently obtained from a financial institution through the misuse of an identification card which they had illegally obtained by using a homeless person's certificate of residence.

(February, Metropolitan Police Department and Saitama Pref. Police)

## (3) Cases of receipt of criminal proceeds by Boryokudan members

When money laundering cases where Boryokudan members received criminal proceeds are classified in accordance with the main predicate offenses, violations of the Anti-Prostitution Law are overwhelmingly common with 13 cases followed by the crime of the distribution of obscene objects with 3 cases, gambling with 2 cases, and robbery, theft, fraud, false entry in officially authenticated instrument, violations of the Copyright Law, violations of the Immigration Control and Recognition of Refugee Status Law (promotion of illegal employment), and violations of the Waste Management and Public Cleansing Law with 1 case each. In a case in which Nagasaki Prefectural Police arrested members of Boryokudan affili-
ated with the Yamaguchi-gumi for receiving criminal proceeds in the form of Mikajimeryo (protection money) from an entity carrying out prostitution on an online-dating site, the total amount of Mikajimeryo (protection money) received over a three year period reached approximately ¥60,000,000. It can be seen that the collection of Mikajimeryo (protection money) from various industries including illegal businesses is still one of the typical sources of funding activities of Boryokudan.

## [Case 4] (The receipt of criminal proceeds under the name of Mikajimeryo (protection money) related to Anti-Prostitution Law violations)

A principal member of Boryokudan affiliated with the Yamaguchi-gumi was arrested for violations of the Organized Crimes Punishment Law (receipt of criminal proceeds) for constantly receiving a portion of the criminal proceeds obtained through the arrangement of prostitution by a prostitute club which was run by a junior member of the same group. Payment was made under the name of Mikajimeryo (protection money) from June 2004 to May 2007.

(August, Nagasaki Pref. Police)

## [Case 5] (The receipt of criminal proceeds related to the Copyright Law for the sale of pirated DVD's)

Principal members of Boryokudan affiliated with the Yamaguchi-gumi were arrested under the Organized Crimes Punishment Law (receipt of criminal proceeds) for receiving a portion of criminal proceeds as bodyguard fees. Those proceeds had been obtained by others who were selling in street stalls DVD's of movies, etc. which had been reproduced without permission in violation of the Copyright Law. (June, Osaka Pref. Police)

Additionally, in many cases Boryokudan members are paid for giving assistance to criminals. In November, Osaka Prefectural Police and Hyogo Prefectural Police found Boryokudan members, colluding with a robbery group which had formed on the internet crime site, received approximately ¥6,000,000 in cash after the latter conducted a criminal act with the advice of the former.

## [Case 6] (The receipt of criminal proceeds related to a robbery case)

A member of Boryokudan affiliated with the Yamaguchi-gumi was arrested for violations of the Organized Crimes Punishment Law (receipt of criminal proceeds, etc.). He gave advice through the internet crime site "yami-no-shokugyo-anteijo" or "black-market employment office," on the location of security cameras, the number of employees, and other matters related to a pachinko parlor to a criminal group planning to commit robbery in it. In return to the advice, he received approximately ¥6,000,000 in cash out of the ¥19,000,000 robbed from the pachinko parlor.

(November, Osaka Pref. Police and Hyogo Pref. Police)
## 4 | Money Laundering Committed by Foreign Visitors to Japan

Among those cases cleared for the crime of money laundering under the Organized Crimes Punishment Law during 2007, foreign visitors accounted for 4.0% of the total with 7 cases (1 more than the previous year). All of them were for the crime of disguise or concealment of criminal proceeds, (1 more than the previous year) and none for the crime of receipt of criminal proceeds (same as the previous year). Predicate offences of these cases include theft, fraud, violations of the Pharmaceutical Affairs Law, and violations of the Trademark Law.

Ibaraki Prefectural Police and Toyama Prefectural Police arrested in January, a Brazilian of Japanese descent who had brought a large amount of Brazilian made medical supplies into Japan and sold them without authorization throughout Japan making approximately ¥300,000,000. A portion of those proceeds was skillfully concealed by offset settlement against the debts of a foreign company owed to Japanese companies. Proceeds were transferred abroad without any cross-border transactions by two separate domestic acts: the bank transfer of criminal proceeds by the criminal to domestic businesses and the delivery of checks issued by a Brazilian entity to a party in Brazil related to the criminal. The need for watching trade based money laundering is growing.

## [Case 7] (Concealment of criminal proceeds related to Pharmaceutical Affairs Law violations by a Brazilian of Japanese descent)

In violation of the Pharmaceutical Affairs Law, a Brazilian of Japanese descent brought a large amount of Brazilian made medical supplies into Japan and, without authorization, sold them to his compatriots throughout Japan. He concealed a portion of the criminal proceeds amounting to approximately ¥50,000,000 by depositing it in the accounts of multiple Japanese trading companies. The suspect agreed to pay the debts that a trading company in Brazil owed to several Japanese companies. In return, a person residing in Brazil related to the suspect received checks in the same amount issued by the Brazilian company. Checks were cashed at a Brazilian bank and reinvested into the purchase of new medical supplies.

(January, Ibaraki Pref. Police and Toyama Pref. Police)
In the following case, a Nigerian residing in Japan was arrested for the crime of concealment in which bank accounts fraudulently obtained were used for laundering criminal proceeds obtained overseas.

[Case 8] (Concealment of money obtained through fraud carried out in a foreign country by a Nigerian)

In collusion with a Japanese, a Nigerian residing in Japan opened bank accounts in the names of other parties and received, from a person thought to be a member of an international criminal syndicate, money that he obtained as a result of so called Nigerian Fraud. They were arrested for violations of the Organized Crimes Punishment Law (concealment of criminal proceeds) for providing a false statement in response to a query by a teller at a financial institution concerning the purpose of receiving an approximately ¥21,000,000 of remittance.

After withdrawn from the accounts, the funds were sent to different locations abroad. And it was also revealed that the Nigerian and the Japanese, who were born in Nigeria (naturalized in 2006) and believed to be a member of the same criminal group as the Nigerian, conspired with a principal member of a Boryokudan affiliated with the Sumiyoshi-kai in illegally obtaining the accounts above.

(November, Saitama Pref. Police and Chiba Pref. Police)

## Paragraph2 Outline of Cases Cleared for Money Laundering Offences under the Anti-Drug Special Law

There were 5 cases cleared for money laundering under the Anti-Drug Special Law in 2007. Five among them were related to disguise or concealment of drug related criminal proceeds, etc. (same as the previous year) and two were for receipt of drug related criminal proceeds, (3 less than the previous year), bringing the total number of cleared cases since 2000 to 42.

Figure 6-2 The number of cases cleared for the crime of money laundering under the Anti-Drug Special Law

2000	2001	2002	2003	2004	2005	2006	2007	Total
Concealment of Narcotics related criminal proceeds (Article 6)	2 (1)	3 0	0 0	8 (2)	5 (3)	3 (2)	5 (3)	5 (4)	31 (15)
Receipt of Narcotics related criminal proceeds (Article 7)	0 0	0 0	0 0	2 (2)	0 0	2 (2)	5 (2)	2 (1)	11 (7)
Total	2 (1)	3 0	0 0	10 (4)	5 (3)	5 (4)	10 (5)	7 (5)	42 (22)

*The numbers in brackets show the number of cases in which Boryokudan members were involved. (known to the National Police Agency)
## Section2 Deprivation of Criminal Proceeds

It is important to eliminate criminal proceeds in order to prevent their use for the maintenance and expansion of criminal syndicates, and their investment in future criminal activities. The confiscation and collection of criminal proceeds are ordered by courts. In order to ensure that the criminal proceeds are not concealed or spent before the order is given, police are actively seeking pre-indictment confiscation securance orders as provided in the Organized Crimes Punishment Law and the Anti-Drug Special Law.

## Paragraph1 Confiscation and Collection under the Organized Crimes Punishment Law

How provisions related to confiscation and collection under the Organized Crimes Punishment Law were applied in a trial court in 2007 is shown in the following figure, Figure 6-3.

Upward trend continues over the past five years, as the number of offenders rose every year, albeit the amount of deprivation dropped in 2003.

Figure 6-3 Outline of the application of confiscation and collection provisions under the Organized Crimes Punishment Law in normal first trials

Year	Confiscation	Collection	Total
People	Amount	People	Amount	People	Amount
2002	7	5,043	17	241,408	24	246,451
2003	8	4,278	20	144,397	28	148,675
2004	15	69,804	22	504,806	37	574,610
2005	18	70,138	54	816,175	72	886,313
2006	27	154,723	75	3,408,638	102	3,563,362

Note 1: Data is based on the White Paper on Crime.

2: Amounts are in thousands of yen (with amounts fewer than one-thousand yen rounded down).

3: When confiscations and collections were ordered in duplicate for accomplices, the number is a total of all amounts and offenders.
## Paragraph2 Confiscation and Collection under the Anti-Drug Special Law

Following shows how the confiscation and collection related provisions of the Anti-Drug Special Law were applied in a trial court, Figure 6-4.

The number of offenders in confiscations fluctuates from year to year while the number of offenders in collections hovers in the 300's. Additionally, there are large fluctuations in the amount of confiscations from year to year while the amount of collections stays centered around ¥2,000,000,000.

Figure 6-4 Outline of the application of confiscation and collection provisions of the Anti-Drug Special Law during normal first trials

Year	Confiscation	Collection	Total
People	Amount	People	Amount	People	Amount
2002	45	176,959	307	1,363,995	352	1,540,954
2003	47	36,539	304	1,541,756	351	1,578,295
2004	75	583,372	329	3,270,608	404	3,853,980
2005	39	64,332	316	3,513,785	355	3,578,117
2006	62	133,441	373	2,372,788	435	2,506,229

Note1: Data is based on the White Paper on Crime.

3: When confiscations and collections were ordered in duplicate for accomplices, the number is a total of all amounts and offenders.

2: Amounts are in thousands of yen (with amounts fewer than one-thousand yen rounded down).

4: Foreign currencies were converted to Japanese yen at the exchange rate current at the time of the ruling.
## Paragraph3 Pre-indictment Confiscation Securance Order of Criminal Proceeds

## 1 Pre-indictment Confiscation Securance Order issued under the Organized Crimes Punishment Law

Pre-indictment confiscation securance orders were issued 21 times in 2007, in accordance with the provision of Article 23 of the Organized Crimes Punishment Law, in such cases as opening a gambling place for profit, so-called black-market finance offenses, fraud, violations of the Copyright Law, violations of the Anti-Prostitution Law, and distributions of obscene objects. The total number of cases since the law was enforced is 61. Pre-indictment securance order is one of the methods given to judicial police officers for depriving Boryokudan of criminal proceeds and preventing them from further engaging in illegal activities.

A revision to the Organized Crimes Punishment Law, effective on 1 December 2006, created a new provision which is intended to permit criminal asset damage caused by Furikome fraud and black-market finance offenses to be confiscated. In 2007, Article 13 Paragraph 3 (criminal asset damage) of this law was applied for the first time when a pre-indictment confiscation securance order was executed for interests illegally collected from victims. This is one of the measures by which police could contribute to the work of public prosecutors in the recovery of criminal asset damages which they perform in accordance with the "Law Concerning Support, etc. of Damage Recovery Payments for Criminal Asset Damages, etc."

Figure 6-5 The amounts and number of incidents of pre-indictment confiscation securance order issued under the Organized Crimes Punishment Law

2000	2001	2002	2003	2004	2005	2006	2007	Total
3	1	5	7	7	8	9	21	61
(1)	(1)	(4)	(3)	(5)	(0)	(3)	(7)	(24)

*The numbers in brackets show the number of cases in which Boryokudan members were involved. (known to the National Police Agency)

Year	Total amount of money and credit	Other
2000	¥3,590,620
2001	¥768,500
2002	¥4,304,999
2003	¥12,809,068	Land 6,600m
2004	¥12,079,511
2005	¥564,953,561
2006	¥52,680,512
2007	¥268,801,546
Total	¥919,988,317	Land 6,600m