Recent important amendments to Japanese AML legislation come into force

Two years after being approved by the Japanese Diet, important amendments to Japan's primary anti-money laundering (“AML”) legislation, the Act on Prevention of Transfer of Criminal Proceeds (the "Criminal Proceeds Act"), recently came into effect on October 1, 2016 (the "2016 Amendments").[1] The 2016 Amendments are particularly relevant for banks and other financial institutions operating in Japan as it sets out revisions in relation to how certain institutions should determine suspicious transactions, verify contracts with foreign correspondent banks and implement additional in-house AML measures.

The Japanese government was previously cited by the Financial Action Task Force ("FATF") for inadequately addressing AML issues in 2008[2] and there was even a time in 2014 where the FATF contemplated adding Japan to its "gray list" of high-risk jurisdictions such as Sudan and Cuba.[3] Further to initial amendments to the Criminal Proceeds Act which came into effect in April 2013, the 2016 Amendments take Japanese AML legislation one step closer to fully addressing the FATF's criticisms and to resembling more robust AML regimes seen in other developed nations.

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