Silviase/jgov_v1.4_full_ann huggingface dataset:
## I ntroduction

Since the enactment of the Act on Prevention of Transfer of Criminal Proceeds in 2007, the Act has been amended several times in response to changes in domestic and international environments concerning such issues as money laundering, and its function has been strengthened. Additionally, specified business operators, including financial institutions, prescribed in this Act have made efforts to enhance their system to monitor illegal fund transfer, and as a result, the number of suspicious transaction reports (STRs) filed with the competent administrative authority by specified business operators in 2017 exceeded 400,000, which was about the same as in 2016, which had been a record high. In the meantime, the number of cases wherein the analysis of filed STRs led to arrests has also increased significantly, to reach a record high. STRs are being used by investigative authorities in countering organized crime effectively.

As globalization of the economy and financial services is spreading remarkably today, international cooperation is essential for the fight against global-scale money laundering. Under the recommendations devised by the Financial Action Task Force (FATF, an intergovernmental body concerning Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) measures) as international standards, competent government authorities take effective measures against money laundering in unison. Japan also has been carrying out necessary legislative work in response to international requirement, and in June 2017, the government promulgated the Act for Partial Amendment of the Act on Prevention of Transfer of Criminal Proceeds, under which the scope of applicable offences for criminal proceeds was expanded. As a result, officials of the National Taxation Agency and other agencies were included on the list of persons who are to receive information on suspicious transactions. The amended Act was put into force on July 11, 2017.

What is imperative for overcoming the challenges is that law enforcement agencies strategically take various measures in cooperation with the private sector from the viewpoint of global cooperation and coordination. This will never be possible unless we gain broad support and understanding of specified business operators and the general public as their customers.

The aim of this annual report is to make individual citizens as well as those who are directly affected by the regime aware of the situation and thereby gather much more support for our efforts. Our ultimate goal is to contribute to the safety and peace of national life and to the integrity and development of the international financial system.
## Legend

## 1 Abbreviations for laws

Abbreviations for laws are as follows.

[Abbreviation] [Law]

Anti-Drug Special Provisions Law……Law concerning Special Provisions for the Narcotics and Psychotropics Control Law, etc. and Other Matters for the Prevention of Activities Encouraging Illicit Conduct and Other Activities Involving Controlled Substances through International Cooperation (Act No. 94 of 1991)

Act on Punishment of Organized……Act on Punishment of Organized Crimes and Control of Crime Proceeds (Act No. 136 of 1999)

Act on Punishment of Financing……Act on Punishment of the Financing of Criminal Activities for the Purpose of Intimidation of the General Public and of Governments (Act No. 67 of 2002)

Customer Identification Act……Act on Customer Identification by Financial Institutions, etc. (Act No. 32 of 2002)

Amended Customer……Act on Confirmation of Customers Identification by Identification Act

Financial Institution, etc. and Prevention of Unauthorized Use of Deposit Account, etc. (Act No. 32 of 2002)

Immigration Control Act……Immigration Control and Refugee Recognition Act (Cabinet Order No. 319, 1951)

Investment Deposit……Act Regulating the Receipt of Contributions, the

and Interest Rate Act Receipt of Deposits, and Interest Rates (Act No. 195

of June 23, 1954)

Amusement Business Act ……Act on Control and Improvement of Amusement Business, etc. (Act No. 122 of 1948)

## 2 Abbreviations for conventions, etc

Abbreviations for conventions, etc. are as follows.

[Abbreviation] [Conventions, etc.]

UN New Narcotics Convention……United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Convention No. 6 of 1992)

G8 Action Plan Principles.....G8 Action Plan Principles to prevent the misuse of companies and legal arrangements (Agreed at G8 Summit in Lough Erne in June 2013)

Japan Action Plan……Japan Action Plan to prevent the misuse of companies and legal arrangements (Announced in June 2013)
## 3 Others

In this Annual Report, the following terms include corporations, etc. as follows.

[Terms]

Lawyer: Registered foreign lawyers and legal professional corporations are included.

Judicial scrivener: Judicial scrivener corporations are included.

Certified administrative procedures legal specialist: Certified administrative procedures legal specialist corporations are included

Certified public accountant: Foreign certified public accountants and audit corporations are included.

Certified public tax accountant: Certified public tax accountant corporations are included.
Chapter 4 Reports of Suspicious Transactions 46

Section 1 System Outline 46
1. Purpose 46
2. Flow of Suspicious Transaction Reporting 46
3. When STRs are Required 47
4. Identification of Suspicious Transactions 48

Section 2 Situation of STR Filings in 2017 48
1. Transition of the Number of STR Filings 48
2. Number of Received Reports by Business Types 49
3. Number of Received Reports Classified by Methods 51

Section 3 Dissemination and Use of STRs in 2017 51
Paragraph 1 Dissemination 51
Paragraph 2 Use of STRs in the Prefectural Police 51
Paragraph 3 Utilization of Reports by National Investigative Authorities 55

## Chapter 5 Crackdown on Money Laundering

Section 1 Arrests Made for Violation of the Act on Prevention of Transfer of Criminal Proceeds in 2017 57
Section 2 Cleared Cases of Money Laundering in 2017 58
Paragraph 1 Cleared Cases of Money Laundering under the Act on Punishment of Organized Crimes 58
1. Number of Cleared Cases 58
2. Modus Operandi of Money Laundering Observed in Cleared Cases 59
3. Money Laundering Cases related to Boryokudan (General name for Japanese gangster organizations) 60
4. Money Laundering conducted by Foreign Visitors to Japan 62
Paragraph 2 Cleared Cases of Money Laundering under the Anti-Drug Special Provisions Law 62
Section 3 Temporary Restraining Order for Confiscation of Criminal Proceeds before Institution of Prosecution in 2017 63
Paragraph 1 Temporary Restraining Order under the Act on Punishment of Organized Crimes 63
Paragraph 2 Temporary Restraining Order under the Anti-Drug Special Provisions Law 65
Section 4 Application of Provisions of Confiscation and Collection of Equivalent Value 67
Paragraph 1 Application of Provisions of Confiscation and Collection of Equivalent Value under the Act on Punishment of Organized Crimes 67
Paragraph 2 Application of Provisions of Confiscation and Collection of Equivalent Value under the Anti-Drug Special Provisions Law 67
Section 5 Cases of Cross-Border Money Laundering 68

## Chapter 6 Promotion of International Cooperation

Section 1 Activities of International Institutions 69
Paragraph 1 FATF 69
1. Organization 69
2. Activities 69
3. Mutual Evaluation for Japan 71
4. JAFIC's Participation 72
Paragraph 2 APG 73
1. Organization 73
2. Activities 73
3. JAFIC's Participation 73
Paragraph 3 Egmont Group 73
1. Organization 73
2. Activities of the Egmont Group 74
3. JAFIC's Participation 74
Section 2 Progress of the International Cooperation in 2017 75
Paragraph 1 Participation in the Activities of International Organizations 75
Paragraph 2 Information Exchange with Foreign FlUs 75
1. Establishment of the Framework for Exchange of Information 75
2. Situation of Information Exchange 77

Note 1: Unless otherwise noted, statistics and other numbers shown, including in charts and figures, are taken from National Police Agency surveys.

Note 2: In this Report, the number of cases is counted by that of cases reported by prefectural police, so it is different from that of arrest cases.
## Overview of History of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Measures

Money laundering refers to attempts to evade the discovery of money obtained through illicit means, especially criminal proceeds, and arrests by investigative authorities by concealing the sources or beneficial owners of the money. If effective measures are not taken against money laundering, criminal proceeds continue to be utilized for further crimes or to become rife with organized crimes or terrorism. Money laundering also could pose serious threats to sound economic activities. Therefore, in order to ensure the safety and peace of national life and the sound development of economic activities, it is critical to take positive steps for AML/CFT.

The international community has continued to develop AML/CFT regimes in an effort to prevent and eradicate money laundering and terrorist financing (ML/TF), according to which Japan has also been working on it in cooperation with the international community.

The various AML/CFT regimes put in place and the follow-up activities we have made for their effective implementation as described in this report could, therefore, illustrate our dedication to the global challenge in fighting against ML/TF and robust domestic efforts.

## Section 1 AML/CFT Efforts in the International Community

### 1. Anti-Money Laundering as a Countermeasure against Narcotic Drugs

Through the 1980s, the global spread of narcotics abuse was taken as a crisis in the international community, prompting a variety of initiatives to address the issue. Especially in fighting against illegal transactions by transnational drug-trafficking organizations, it was recognized as important to inflict damage on the source of their funds, by all measures, such as confiscating illegal proceeds from drug manufacturing and trafficking and effectively preventing their money laundering activities. In this context, the UN New Narcotics Convention was adopted in December 1988 and required each state to criminalize activities such as hiding drug crime proceeds and to establish relevant regulations to confiscate such proceeds.

At the Arch Summit in July 1989, in order to deepen international cooperation on money laundering initiatives related to drug crimes, the major developed countries decided to establish the FATF. In April 1990, urged by the need for standardizing measures in different countries, the FATF devised "The 40 Recommendations", as standards for anti-money laundering
related to the measure to prevent the physical cross-border transportation of funds was added to these recommendations which made them “The 9 Special Recommendations”.

### 4. Countermeasures against Changing Money Laundering Trend

In accordance with development of measures, the trend of money laundering has also been changing such as the employment of new tactics of concealing of funds using business sectors other than financial institutions. As a result, the FATF revised in June 2003 "The 40 Recommendations," extending the scope of operators required to implement the Recommendations to designated non-financial businesses and professions (DNFBPs). Furthermore, in February 2012, the 40 Recommendations and 9 Special Recommendations were integrated and upgraded as the new 40 Recommendations in order to properly address the proliferation of weapons of mass destruction as well as additional threats of corruption including bribery by public officials and appropriation of property.

At the Lough Erne Summit in June 2013, the participating countries agreed on the G8 Action Plan Principles to prevent the misuse of companies and legal arrangements in light of the fact that companies and legal arrangements are being misused for money laundering and tax evasion due to a lack of transparency over their ownership and control.
# Section 2 AML/CFT in Japan

### 1. Enforcement of “the Anti-Drug Special Provisions Law”

Anti-money laundering measures in Japan have been developed in accordance with increasing AML/CFT awareness among the international community. Firstly, in June 1990, the then Director-General of the Banking Bureau at the Ministry of Finance issued a notice which demanded that financial institutions verify customers' identity. Next, "the Anti-Drug Special Provisions Law" was enforced in July 1992 as one of the domestic laws implementing "New Narcotics Convention", aiming mainly at dealing with drug crime proceeds. This law criminalized money laundering activities connected with drug crimes for the first time in Japan and established the suspicious transaction reporting system (regarding drug crime proceeds) by financial institutions etc. in response to "The 40 Recommendations."

### 2. Enforcement of “the Act on Punishment of Organized Crimes”

The first FATF mutual evaluation of Japan in 1994 recommended remedial actions to be taken for the limited scope of predicate offences for money laundering that had targeted only drug crimes. As a practical matter, it was extremely difficult for reporting entities to determine if each transaction was actually related to drug crimes in reporting suspicious transactions, resulting in fewer suspicious transaction reports. This ineffectiveness was partially caused by the fact that there was no system in place to collect reported information or to disseminate it to investigative authorities.

To address these problems, “the Act on Punishment of Organized Crimes” was enforced in February 2000 in Japan based on “The 40 Recommendations” as revised in 1996. This law represented progress in regulations against criminal proceeds on several points. Firstly, the scope of predicate offences for money laundering was extended to include other serious crimes besides drug-related crimes. Secondly, the scope of crimes subject to the suspicious transaction reports regime was also extended to include other serious crimes besides drug crimes. Thirdly, the law mandated the Financial Supervisory Agency (later reorganized to the Financial Services Agency) to serve as the FLU of Japan, and the Japan Financial Intelligence Office (JAFIO) was established within the agency, accordingly.

### 3. Enforcement of “the Act on Punishment of Financing of Offences of Public Intimidation” and “the Act on Customer Identification by Financial Institutions”, and Amendment of “the Act on Punishment of Organized Crimes”

As a major development after the terrorist attacks in the US, “the Act on the Punishment of Financing of Offences of Public Intimidation” was enforced in July 2002 as a domestic law to join “the International Convention for the Suppression of the Financing of Terrorism”, criminalizing terrorist financing and collecting of funds for terrorism. At the same time, “the Act on Punishment of Organized Crimes” was partially amended, so that the terrorist financing/fund collection offence was included in predicate offences. Moreover, terrorist funds were stipulated as criminal proceeds, which means that assets suspected of terrorist funds are
statement in June 2014, the Act for Partial Amendment of the Act on Prevention of Transfer of Criminal Proceeds was enacted and was enforced in full in October 2016, and Japan has addressed all issues thus pointed out. The amended Act includes provisions for clarification of the determination method of suspicious transactions, enhanced 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 responding to changes in social conditions and addressing the deficiencies identified in the FATF Mutual Evaluation Report (MER) of Japan.

Major legal amendments in 2017 are detailed in Chapter 2 (Legislative Regime on AML/CFT).
under the division. Internationally, the Japan Financial Intelligence Center (JAFIC) is recognized as the FIU of Japan.

### 2. Mission and Structure

JAFIC is tasked with the following works in accordance with the Act on Prevention 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;

· Investigation and analysis of the status of transfer of criminal proceeds and formulation of the national risk assessment report

· 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 ML/TF 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 ML/TF 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 organized 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 are composed of four core principles, six key areas and confidentiality of STR infor-
mation 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.