# Section 3 Establishment of the Japan Financial Intelligence Center (JAFIC)

### 1. History of FlU in Japan

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 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 to provide STRs to investigative authorities and 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. The Japan Financial Intelligence Center which includes the positions of the Director for Analysis of Financial Intelligence (abolished on April 1, 2015) and the Director for International Cooperation was established.