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  • Money Laundering (ML)

    ML refers to the act that attempts to conceal or disguise the true nature of proceeds which are obtained through illicit means, namely criminal proceeds, to evade being detected or arrested by investigative authorities.
    *A crime that generates illicit proceeds that become the underlying assets of money laundering is called a predicate offence.

    Money Laundering

    Tip 1

    The estimated amount of money laundered globally in one year is approximately 2 - 5% of global GDP.

    Source: United Nations Office on Drugs and Crime (UNODC).

  • Terrorist Financing (TF)

    TF refers to the collection and provision of funds for terrorist attacks or terrorist organizations/individual terrorists.

    Terrorist Financing
  • Proliferation Financing (PF)

    PF refers to the provision of funds or financial services to parties that are subject to asset freezing and other measures for developing, possessing or exporting weapons of mass destruction (nuclear, chemical, and biological weapons).

    Proliferation Financing

    Tip 2

    As for asset freezing of CPF measures, more than 300 individuals and entities are designated as those involved in North Korea’s nuclear-related programs and Iranian nuclear activities under the Foreign Exchange and Foreign Trade Act (FEFTA) and the Terrorist Asset Freezing Act (TAFA) in accordance with United Nations Security Council Resolutions, etc.

    Source: Economic sanctions and list of individuals and entities (Ministry of Finance)<Available in Japanese>

    Why are AML/CFT/CPF measures important?

    If effective AML/CFT/CPF measures are not in place, criminal proceeds will continue to be utilized for further crimes or be used to promote organized crimes or terrorism. ML/TF/PF could also pose a serious threat to sound economic activities and to the integrity of the financial system. Therefore, in order to ensure the safety of citizen’s lives and sound development of economic activities, it is critical to take determined actions of AML/CFT/CPF in cooperation with the international community.

    Overview of ML/TF/PF
    ML TF PF
    Sources of funds Criminal proceeds The origins of funds do not matter The origins of funds do not matter
    Objectives of transfer of funds or financial services To evade the detection of proceeds obtained through illicit means and arrests by investigative authorities by concealing the sources or beneficial owners of the proceeds. To implement terrorist attacks or support terrorist activities To support the proliferation (development, transactions, etc.) of weapons of mass destruction
  • AML/CFT/CPF Measures

    The Financial Action Task Force (FATF) is an inter-governmental body established following the Economic Declaration of the 1989 Arche Summit Communique to promote international cooperation on AML. Since the terrorist attacks in the United States in 2001, the FATF has also taken the initiative in promoting CFT globally. Furthermore, the revision of the FATF Recommendations added the FATF’s mandate to cover CPF in February 2012.The FATF operational guidelines are provided in the FATF Mandate approved by ministers in charge of the FATF. The FATF has 38 member jurisdictions (including Japan) and 2 regional organizations and the FATF Plenary meets three times a year, usually in February, June and October.

    The FATF publishes the High-Risk Jurisdictions subject to a Call for Action, is often externally referred to as the “black list”, and the Jurisdictions with strategic deficiencies, which is often externally referred to as the “grey list”, to identify jurisdictions that fail to fully comply with international standards and monitor improvements.

    FATF-Style Regional Bodies (FSRBs) have been established for 9 regions. Like the FATF members, FSRB members conduct mutual evaluation in line with the FATF standards, which are applied to more than 200 jurisdictions around the world. The Asia/Pacific Group on Money Laundering (APG) is located in Sydney as the FSRB for the Asia Pacific region. As an APG member, Japan participates in APG activities.

    List of FATF members

    (List of FATF members)
    Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, Hong Kong, China, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Portugal, Russian Federation (*), Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Türkiye, United Kingdom, United States, European Commission (EC), Gulf Co-operation Council (GCC)
    (*) The FATF has decided to suspend the membership of the Russian Federation since February 2023.

    As of November 2023

    History of AML/CFT/CPF measures

    More Details