Silviase/jgov_v1.4_full_ann huggingface dataset:
# 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 ML/TF, 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 National Risk Assessment of ML/TF (NRA) by the National Public Safety Commission was put into force on the day of the promulgation of the amended Act (November 27, 2014).

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 operators,” 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.

## 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)

O 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 NRA, 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 Operators

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 related to identification by lawyers are described in (1) to (7) and Table 2-1 below.

## (1) Verification at the time of transactions (Article 4)

In conducting specified transactions described in Table 2-2 with customers, specified business operators are required to verify their identification data (the name, domicile and
eign exchange business operator located abroad has developed a system necessary for appropriately implementing a measure equivalent to verification at the time of transactions.

(6) Notification pertaining to foreign exchange transactions (Article 9) (Article 10 after the amendment)

In making wire transfers to other countries, specified business operators conducting exchange transactions on a regular basis are required to notify the receiving exchange transaction business operator located abroad of certain items, such as the customer's name and account number.

(7) Measures to ensure thorough and effective CDD measures to be taken (Article 10) (Article 11 after the amendment)

Specified business operators are required to take measures to keep information up-to-date concerning matters for which verification at the time of transactions has been conducted, and to set up necessary systems.

Following the enforcement of the amended act, they are required to formulate rules concerning the implementation of such measures as verification at the time of transactions, etc. and to appoint a person in charge of supervising business affairs, etc.

(8) Measures for verification of customer identification data by lawyers (Article 11) (Article 12 after the amendment)

It is established by special provision, that lawyers shall conduct measures relevant to those described in (1) through (3) and (7) above based on The Rule of the Japan Federation of Bar Associations in line with cases of judicial scrivener.

The CDD regime in which measures as described in (1) through (3) above are undertaken is intended to make the financial or other services less attractive to those who try to use them for money laundering or any other illicit purposes and to ensure traceability of illicit funds. Meanwhile, the STR regime as described in (4) in which reported information will be used for investigations into money laundering and/or predicate offences, is also intended to protect the financial system from misuse to ensure its soundness. Measures (as noted in (7)) are intended to ensure accuracy of the customer identification process during transactions, making the process more efficient. These measures are expected to help specified business operators to be more aware of ML/TF risks, facilitating a greater degree of comprehensiveness and efficiency.

The purpose of notification pertaining to strict verification at the time of the conclusion of correspondence contracts and foreign exchange transactions described in (5) and (6) is to make the financial or other services less attractive to those who try to use them for international money laundering and also to ensure international traceability of illicit funds.
Table 2-1 【Measures that must be implemented by specified business operators under the Act】

Mandatory measures	Verification at the time of transaction [Article 4]	Preparation and preservation of verification records [Article 6]	Preparation and preservation of transaction records etc. [Article 7]	Reporting of suspicious transactions [Article 8]	Strict verification at the time of the conclusion of correspondence and hence contracts [Article 9]	Notification pertaining to foreign exchange transactions [Article 10]	Measures to ensure thorough and effective CDD measures to be taken [Article 11]
Financial institutions (items 1 through 36)	○	○	○	○	○	○	○
Financial leasing operators (item 37)
Credit card operators (item 38)
Real estate agents (item 39)
Dealers in precious metals and stones (item 40)
Postal receiving service providers (item 41)
Telephone receiving service providers (item 41)
Telephone forwarding service providers (item 41)
Judicial scriveners (item 43)	○	○	○	×	×	×
Certified administrative procedures specialists (item 44)
Certified public accountants (item 45)
Certified public tax accountants (item 46)
Lawyers (item 42)	As prescribed by the bylaws set by the Japan Federation of Bar Associations based on examples of judicial scriveners, etc. (Article 12).	As prescribed by the bylaws set by the Japan Federation of Bar Associations based on examples of judicial scriveners, etc. (Article 12)
Figure 2-3 Methods of Verification at the Time of Transaction

For transactions that carry a high risk of money laundering, verification of transaction purpose and intended nature must be carried out with stricter criteria. And, for transactions of over ¥2 million, verifications of assets and income are also required.

## 6 Dissemination of STR Information (Articles 12 and 13) (Articles 13 and 14 after the amendment)

In order to make use of STR information for investigations conducted domestically or internationally JAFIC may disseminate such information to public prosecutors, assistant officers to prosecutors, judicial police officials (police officers, narcotics control agents and coast guards), customs officers and personnel of the Securities and Exchange Surveillance Commission (SESC) and other related investigators. JAFIC would also disclose STR information to foreign FLUs concerned based on the agreed terms of conditions.

## 7 Supervision (Articles 14 through 18, 24, 25 and 29) (Articles 15 to 19, 25, 26 and 30 after the amendment)

The Act provides for a supervisory regime undertaken by competent administrative authorities in order to ensure the compliance of specified business operators. For this purpose, the supervising authorities would exercise a supervisory power by conducting on or off-sight in-
spection of the regulated businesses or issuing a rectification order for non-compliance as necessary.

Persons who have failed to submit reports or materials, or submit false reports or materials, or who refused on-site inspections, shall be punished with imprisonment with labor for not more than one year or a fine of not more than three million yen or both. A person who violates rectification order shall be punished with imprisonment with labor for not more than two years or a fine of not more than three million yen or both.

Importantly, to complement the supervision by the regulating authorities, JAFIC is authorized to advise the supervising authorities over whether appropriate actions should be taken against a specific specified business operator based on the fact of JAFIC detecting non-compliance. For the purpose of this duty, it is also granted a power of inspection of a specified business operator in doubt.

## 8 Penal Provisions regarding Reception/Delivery/Provision of Deposit/Savings Passbooks and Exchange Transaction Cards(Articles 27 and 28) (Articles 28 and 29 after the amendment)

For years it had been a significant challenge to take actions against traded deposit/savings passbooks, ATM cards or Exchange Transaction Cards which were exposed to exploitation for the purpose of money laundering or any proceed-related crimes. In order to prevent this, the Act prohibits anyone to give or take a deposit/savings passbook as a subject of transaction no matter whether or not it is for value with a penalty of imprisonment with labor for not more than one year or a fine of not more than one million yen or both. Specifically, when such transaction is conducted as a business of any parties concerned, the penalty would be aggravated to imprisonment with work for not more than three years or a fine of not more than five million yen or both.

Furthermore, it is also prohibited that anyone invites or solicits another party to assign, deliver or provide a deposit/savings passbook no matter whether or not it is for value, resulting in a punishment of imprisonment with labor for not more than one year or a fine of not more than one million yen or both.

## Section 2 Outline of the Act on Punishment of Organized Crimes and the Anti-Drug Special Provisions Law

## Paragraph 1 The Act on Punishment of Organized Crimes

The Act on Punishment of Organized Crimes was enacted in response to the introduction of the requirement for expanding the scope of predicate offenses of money laundering to include serious crimes due to the revision of the FATF 40 Recommendations of 1996 and the international agreement reached at the 1998 Birmingham Summit on the establishment of an Flu, and it was put into force in February 2000. In terms of criminal proceeds regulations,
this law has expanded the scope of predicate offenses of concealment of criminal proceeds, etc. to include certain serious crimes. It also provides for the confiscation and collection of equivalent value of criminal proceeds, etc. Provisions concerning FlU were provided in the Act on Punishment of Organized Crimes before the enforcement of the Act on Prevention of Transfer of Criminal Proceeds.

## 1 Criminalization of Money Laundering (Articles 9 through 11)

## (1) Illegal corporate control management (Article 9)

The Act on Punishment of Organized Crimes criminalizes the act of changing executives, etc. of a legal person as a means to control its business management by using illicit proceeds (proceeds from certain crimes, proceeds from certain drug-related criminal proceeds, assets acquired through ownership or disposition of those proceeds and assets including such assets and other assets).

## (2) Concealment of criminal proceeds (Article 10)

The following act are criminalized by this article: (i) The Act of disguising facts with respect to acquisition or disposition of criminal proceeds, (ii) the act of concealing criminal proceeds, (iii) the act of disguising facts with respect to the source of criminal proceeds.

## (3) Receipt of criminal proceeds (Article 11)

The act of knowingly receiving criminal proceeds is criminalized by this article.

## 2 Confiscation, Collection of Equivalent Value and Securance Measures (Articles 13 through 16, 22, 23, 42 and 43)

The system of confiscation and collection of equivalent value provided in the Act on Punishment of Organized Crimes is left to the discretion of the court in principle, like the system provided in the Penal Code. However, it has been strengthened compared with the system of confiscation and collection of equivalent value provided in the Penal Code, in that the scope of items subject to the system has been expanded to include monetary claims and assets obtained as the fruit of criminal proceeds and that securance measures have been established.

Regarding the restraining order for confiscation, one of the securance measures, the court may prohibit — either upon the request of a prosecutor or at based on its own authority — the disposition of assets that should be confiscated in a prosecuted case in order to prevent the disposition before a court judgment is made. In cases where there is the possibility that an offender who acquired assets that are equivalent to criminal proceeds will detect the start of investigation and dispose of the assets, the judge may prohibit the disposition of the assets upon the request of judicial police officers, etc. even before institution of prosecution for a period of 30 days or less (the period may be renewed upon the request of the prosecutor). Regarding the restraining order for collection of equivalent value, there is a similar provision to that regarding the restraining order for confiscation. (However, only the prosecutor can request a temporary restraining order before institution of prosecution.)
## Paragraph 2 Anti-Drug Special Provisions Law

The Anti-Drug Special Provisions 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” compiled in 1990, and enforced in July 1992. This law contains two items with regard to measures against drug crime proceeds as below. In terms of regulation on drug-related criminal proceeds regulations, this law provides for the following two matters:

## 1 Punishment of Money Laundering (Articles 6 and 7)

The Anti-Drug Special Provisions Law criminalize the acts of disguising facts with respect to the acquisition or disposition of drug-related criminal proceeds and concealing and receiving such proceeds as examples of money laundering.

## 2 Confiscation, Collection of Equivalent Value and Securance Measures (Articles 11 through 13, 19 and 20)

Drug-related criminal proceeds shall be confiscated or the equivalent value thereto shall be collected. The system of confiscation and collection of equivalent value provided in this law is mandatory in principle whereas the system provided in the Act on Punishment of Organized Crimes is discretionary.

Regarding the restraining orders for confiscation and collection of equivalent value, there are provisions similar to those under the Act on Punishment of Organized Crimes.

## Section 3 Recent Legislative Changes

From the AML/CFT perspective, the National Police Agency has made necessary amendments as appropriate to the Act on Prevention of Transfer of Criminal Proceeds and its subordinate decrees in order to adapt to the current AML/CFT environment.

## 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 AML/CFT 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 Ex-
perts (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 19 of the same year and the amended law was promulgated on November 27. The provision of the amended act that concerns the compilation of NRA was put into force on the day of promulgation, and other provisions will be put into force on October 1, 2016.

## (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 NRA, which is published each year by the National Safety Commission in addition to the results of verification at the time of transactions and other factors.

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

When concluding a correspondent banking contract, 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 measures equivalent to verification at the time of transactions.

C. Expansion of obligation for specified business operators to develop necessary internal control systems

Specified business operators are required to formulate rules concerning the implementation of such measures as verification at the time of transactions, etc. and appointing a person in charge of supervising business affairs, etc.

## 2 Amendment of the Order for Enforcement of the Act on Prevention of Transfer of Criminal Proceeds

## (1) Backgrounds to the amendment

The Order for Enforcement of the Act on Prevention of Transfer of Criminal Proceeds was amended in light of the circumstances concerning transfer of criminal proceeds in addition to the amendment associated with the enforcement of the partial amendment of the Act on Prevention of Transfer of Criminal Proceeds, which was promulgated in November 2014, and the amended order was promulgated on September 18, 2015. Meanwhile, regarding the provisions of the amended act that were scheduled to be put into force on a day prescribed by Cabinet Order that is not later than two years from the day of promulgation, the date of enforcement was set as October 1, 2016, and the said amended order for enforcement will also be put into force on the same day excluding some provisions.

## (2) Overview of the amendment of the Order for Enforcement of the Act on Prevention of Transfer of Criminal Proceeds, etc

A. Formulation of rules concerning specified transactions conducted by financial institu-