The ICLG to: Anti-Money Laundering Laws and Regulations

Japan: Anti Money Laundering 2019

The ICLG to: Anti-Money Laundering Laws and Regulations - Japan covers issues including criminal enforcement, regulatory and administrative enforcement and requirements for financial institutions and other designated businesses in 31 jurisdictions

Published: 09/05/2019

1. The Crime of Money Laundering and Criminal Enforcement

1.1          What is the legal authority to prosecute money laundering at national level?

Money laundering is criminalised by Article 11 of the Act on Punishment of Organized Crimes and by other related acts.  The authority to prosecute money laundering belongs to the prosecutors.

1.2          What must be proven by the government to establish money laundering as a criminal offence? What money laundering predicate offences are included? Is tax evasion a predicate offence for money laundering?

The elements for the offence of money laundering are:

  1. disguising facts pertaining to the sources, acquisition, or disposition of “Criminal Proceeds, Etc.”, which means (a) criminal proceeds, (b) property that are acquired in exchange of criminal proceeds, and (c) commingled property including criminal proceeds; 
  2. hiding of Criminal Proceeds, Etc.; or
  3. (i) acquiring shares or ownership of an entity to control such entity using Criminal Proceeds, Etc., and (ii) executing such shares or ownership to appoint or remove any director or other management member, or to change representative director or similar officer.

Accomplice and accessories to such crime are also punishable.

The predicate offences of criminal proceeds include a variety of crimes, including but not limited to, all crimes which may result in four years’ (or more) imprisonment.

Yes, tax evasion crimes are predicate offences.

1.3          Is there extraterritorial jurisdiction for the crime of money laundering? Is money laundering of the proceeds of foreign crimes punishable?

Yes, there is a provision of extraterritorial jurisdiction for the crime of money laundering (e.g. Article 3 of the Law on Control of Punishment and Crime Profits of Organized Crime).

Yes, money laundering of the proceeds of foreign crime is subject to punishment in Japan.

1.4          Which government authorities are responsible for investigating and prosecuting money laundering criminal offences?

(i) The National Police Agency (“NPA”), and (ii) the government agency supervising the applicable industry area (e.g. Financial Services Agency for the bank industry) are both responsible for making investigations and for imposing administrative penalties.  And if the NPA judges that criminal sanction is appropriate, it will ask the prosecutors to prosecute the case.

1.5          Is there corporate criminal liability or only liability for natural persons?

There is corporate criminal liability.

1.6          What are the maximum penalties applicable to individuals and legal entities convicted of money laundering?

Five years’ imprisonment and a 10 million yen fine.

1.7          What is the statute of limitations for money laundering crimes?

The statute of limitations is five years.

1.8          Is enforcement only at national level? Are there parallel state or provincial criminal offences?

Yes, enforcement is only at national level.

1.9          Are there related forfeiture/confiscation authorities? What property is subject to confiscation? Under what circumstances can there be confiscation against funds or property if there has been no criminal conviction, i.e., non-criminal confiscation or civil forfeiture?

Yes.  The court administers forfeiture procedures.

All property that fall under any of the following may be confiscated:

(i)      instrumentalities of predicate offence or money laundering (together the “Crime”);

(ii)    Proceeds of Crime, including remuneration for Crime (“Criminal Proceeds”);

(iii)   property that is acquired in exchange for Criminal Proceeds; or

(iv)   property of corresponding value of Criminal Proceeds in cases where the Criminal Proceeds are commingled with other property.

There is no non-criminal confiscation nor civil forfeiture.

1.10        Have banks or other regulated financial institutions or their directors, officers or employees been convicted of money laundering?

Yes, but such cases are rare.

1.11        How are criminal actions resolved or settled if not through the judicial process?  Are records of the fact and terms of such settlements public?

Criminal actions regarding money laundering are resolved through judicial processes. 

A reform of the Code of Criminal Procedure in 2018 has enabled a plea-bargain.

2. Anti-Money Laundering Regulatory/ Administrative Requirements and Enforcement

2.1          What are the legal or administrative authorities for imposing anti-money laundering requirements on financial institutions and other businesses? Please provide the details of such anti-money laundering requirements.

The “Act on Prevention of Transfer of Criminal Proceeds” (“AML Act”) is the basic law that provides for anti-money laundering.  For details of the AML Act, there is a cabinet enforcement order of the AML Act and for further details, there is an enforcement ordinance pertaining to the AML Act.

Financial institutions and DNFBPs are required to (i) conduct Customer Due Diligence (“CDD”) measures, (ii) maintain records of CDD information and of transactions with customers, (iii) file Suspicious Transaction Report (“SAR”) where applicable, and (iv) make sufficient efforts to implement internal control to combat money laundering.

2.2          Are there any anti-money laundering requirements imposed by self-regulatory organisations or professional associations?

Yes.  Self-regulatory organisations including those of financial institutions and DNFBPs generally set forth additional requirements.  For example, the Japan Federation of Bar Association implements a rule on AML measures to be taken by lawyers.   

2.3          Are self-regulatory organisations or professional associations responsible for anti-money laundering compliance and enforcement against their members?

Yes, they are.

2.4          Are there requirements only at national level?

Yes.  There is no anti-money laundering requirements imposed at local government level.  Please note, however, that some local governments, including prefectures, demand business entities not to transact with crime organisations and such (or in other words, anti-social forces).

2.5          Which government agencies/competent authorities are responsible for examination for compliance and enforcement of anti-money laundering requirements?  If so, are the criteria for examination publicly available?

Please see question 1.4 regarding the government agencies responsible for the examination for compliance and enforcement of anti-money laundering requirements.  With regard to publicly available examination criteria, there is no apparent criteria, but, pertaining to financial institutions, the Financial Services Agency has issued a guideline pertaining to AML/TF measures to be taken.

2.6          Is there a government Financial Intelligence Unit (“FIU”) responsible for analysing information reported by financial institutions and businesses subject to anti-money laundering requirements?

Yes, the Financial Intelligence Centre of the NPA (“FIC”) is the FIU in Japan.  The FIC publishes an annual report of the result of its analysis of money laundering activities in Japan.

2.7          What is the applicable statute of limitations for competent authorities to bring enforcement actions?

There is no statute of limitation for administrative enforcement actions.  For criminal actions, the statute of limitations is three years.

2.8          What are the maximum penalties for failure to comply with the regulatory/administrative anti-money laundering requirements and what failures are subject to the penalty provisions?

The maximum penalty under the AML Act for individual is imprisonment up to two years and a fine up to 3 million yen.  The maximum penalty for a legal entity is a fine up to 300 million yen. 

2.9          What other types of sanction can be imposed on individuals and legal entities besides monetary fines and penalties?

It depends on the law regulating the business.  For example, banks could be sanctioned under the Banking Act for violation of applicable laws including the AML Act.  Possible sanctions include (i) cancellation of a licence, (ii) order for suspension of business, and (iii) order for rectification. 

2.10        Are the penalties only administrative/civil? Are violations of anti-money laundering obligations also subject to criminal sanctions?

Penalties for violations can be both administrative/civil as well as subject to criminal sanctions. 

2.11        What is the process for assessment and collection of sanctions and appeal of administrative decisions? a) Are all resolutions of penalty actions by competent authorities public? b) Have financial institutions challenged penalty assessments in judicial or administrative proceedings?

Process for assessment: Administrative sanctions are imposed by supervising authorities with prior notice and hearing, but fines cannot be imposed.

Process of collection of sanctions: No fine as administrative sanction.

Process of appeal of administrative decisions: One may file a request to review the administrative decision to the supervising authority itself under Article 6 of the Administrative Complaint Review Act.  If the supervising authority does not change the decision, a lawsuit may then be filed to cancel such administrative decision under Article 8 of the same act.

a)      Not all administrative decisions are made public.

b)      This is very rare but has happened.

3. Anti-Money Laundering Requirements for Financial Institutions and Other Designated Businesses

3.1          What financial institutions and other businesses are subject to anti-money laundering requirements? Describe which professional activities are subject to such requirements and the obligations of the financial institutions and other businesses.

Financial institutions including banks, securities companies, insurance companies, lending businesses, fund transfer businesses, credit card issuing companies, and finance lease companies, among others, are subject to AML regulations, as well as DNFBPs including lawyers, accountants, real estate brokers, jewellery dealers, company service providers and such.

3.2          To what extent have anti-money laundering requirements been applied to the cryptocurrency industry?

The cryptocurrency exchanges are subject to anti-money laundering requirements as cryptocurrency exchanges.  Transactions as cryptocurrency exchanges are subject to anti-money laundering requirements just as other obliged entities.  Please note that cryptocurrency exchanges registered in Japan basically do not interpret themselves as a money transmitter in relation with Japanese law, and therefore they basically judge that Japanese anti-money laundering regulations on wire transfer and money transmitters are not applicable to themselves. 

3.3          Are certain financial institutions or designated businesses required to maintain compliance programmes? What are the required elements of the programmes?

Yes, compliance programmes are required (e.g. Article 11 of the AML Act, Article 355 of the Companies Act, Article 12-2 of the Banking Act). 

The compliance programme is expected to include the following:

  1. training of its officers and employees;
  2. establishment of internal rules to ensure compliance with applicable laws and regulations;
  3. appointment of an officer who will be responsible for ensuring compliance with AML regulations (of Japan);
  4. requiring consent of the officer referred to in (3) for high risk transactions;
  5. analysing money laundering risks and making reports of the result of such analysis, and updating such reports from time to time;
  6. monitoring of CDD records and transaction information to detect suspicious activities;
  7. take measures to ensure that able and appropriate staffs are hired or allocated;
  8. conducting audits;
  9. implementing measures to keep the records of customers up to date; and
  10. implementing AML measures equivalent to those required under Japanese law at its overseas subsidiaries and branches.

3.4          What are the requirements for recordkeeping or reporting large currency transactions? When must reports be filed and at what thresholds?

There is a seven-year recordkeeping of the requirement for transactions for financial institutions and DNFBPs.  There are some exemptions to this requirement, including an exemption for transactions pertaining to the transfer of property with a value equal to or less than 10,000 yen.

For reporting of large currency transactions, please see the answer to question 3.5.

3.5          Are there any requirements to report routinely transactions other than large cash transactions? If so, please describe the types of transactions, where reports should be filed and at what thresholds, and any exceptions.

Financial institutions need to submit various reports pursuant to the Foreign Exchange and Foreign Trade Act.  For example:

  • Article 55 provides for reports for cross-border payment (as described further in question 3.5);
  • Article 55-3 and 55-4 provides for reports for capital transactions; and
  • Article 55-7 provides for reports on foreign exchange operations.

However, most of these reports may be submitted by a financial institution, in aggregate form, on a monthly, quarterly or annual basis depending on the type of report.

3.6          Are there cross-border transactions reporting requirements? Who is subject to the requirements and what must be reported under what circumstances?

For cross-border funds transfer in the amount exceeding 1 million yen, the relevant financial institution must submit a “Statement of Overseas Wire Transfer” (Article 4 of the Act on Submission of Statement of Overseas Wire Transfers for Purpose of Securing Proper Domestic Taxation).

For cross-border payments or set-offs in the amount exceeding 30 million yen, the resident in Japan, that is either the payor or the payee, needs to submit a payment report to the government (Article 55 of the Foreign Exchange and Foreign Trade Act).  Please note that if the payment is done through an office or branch in Japan of a bank or fund transfer business, such report will be submitted through such financial institution.

3.7          Describe the customer identification and due diligence requirements for financial institutions and other businesses subject to the anti-money laundering requirements. Are there any special or enhanced due diligence requirements for certain types of customers?

For high-risk transactions, enhanced CDD measures are necessary. 

For other transactions, normal CDD measures will be necessary, provided that for certain statutory low-risk transactions, CDD is not required unless the transaction is suspicious or very abnormal. 

(1) Normal CDD Measures

(i)      Main Methods of Verification of ID for Face-to-Face Transaction (for Individual Customers):

(a) having a customer present a photo ID document;

(b) having a customer present two types of no-photo-IDs;

(c) having a customer present no-photo-ID, and delivering transaction-related documents with non-transferrable certified mail to the address on such ID (*); or

(d) having a customer present no-photo-ID, and delivering transaction-related documents to the address on such ID.

     * Please note that starting from April 2020, additional requirements will be required to use this method (c).

(ii)    Main Methods of Verification of ID for Non-Face-to-Face Transaction for Legal Entities

          For a legal entity customer, the customer must present an ID document (e.g. certification of the commercial registry) of such legal entity or the obliged entity may conduct customer verification process by using the official commercial registry service or the corporation ID website operated by the National Tax Authority of Japan.  About the verification methods of the representative of the customer, please see (i).

(iii)    Main Methods of Verification of ID for Non-Face-to-Face Transaction for Individual Customer

(a) receiving a copy of ID document, and sending a non-transferrable certified mail to the address on such document;

(b) sending transaction-related document(s) to the customer’s address and have an employee of the mail service business entity confirm the ID presented by the customer at the residence and receive information pertaining to statutory items from such employee; or

(c) having a customer send photo(s) or video including such customer’s face and ID document using an application provided by the Obliged Entity.

(iv)   Main Methods of Verification of ID for Face-to-Face Transaction for Legal Entities

For legal entity customers, method (a) of (iii) is possible.  Also, the obliged entity may receive certification of commercial registry by electronic methods pursuant to statutory procedures, or may conduct customer verification process by using the official commercial registry service or the corporation ID website operated by the National Tax Authority of Japan.

Regarding the verification methods of the representative of the customer, please see (iii).

(v)     Cases Where Verification of ID is Necessary

Transactions that require verification of ID (“Designated Transactions”) are (x) transactions falling under any of the items provided for in Item 1, Article 7 or Article 9 of the Cabinet Order of the AML Act, and (y) suspicious or very abnormal transactions.  Transactions falling under (x) include the opening of bank accounts, and payment of cash in the amount exceeding 2 million yen, among other various transactions.

For transactions falling under (x), there are some statutory exceptions (e.g. transactions with existing customers where verification of ID has been conducted before).

(vi)   Other Items to be Verified

Other items to be verified include:

(a) the purpose of the transaction;

(b) identification of the agent and its authority as agent;

(c) occupation (in case of individual)/purpose (in case of legal entity); and

(d) identification of the substantial owner (in case of legal entity).

(2) Enhanced CDD Measures

(i)      Extent of High-Risk Transactions

Statutory High-Risk Transactions are:

(a) Designated Transactions with Foreign Politically Exposed Persons (“Foreign PEPs”);

(b) Designated Transactions with Residents of High-Risk Countries (which are currently Iran and DPRK); or

(c) transactions derived from a Designated Transaction in which Transaction ID fraud or ID theft is suspected.

(ii)    Additional Requirements for High-Risk Transactions

For Statutory High-Risk Transactions, the following requirements need to be complied with in addition:

(a) verification of ID for Designated Transactions may not be abbreviated even if the customer ID has been verified before (*);   

(b) verification of the identification of the substantial owner needs to be conducted by verifying statutory documents (e.g. shareholders registry, annual securities report); and

(c) verification of the asset and income of the customer is required if the transaction results in transfer of property in the amount exceeding 2 million yen.

* The additional requirement of (a) above is too burdensome and is heavily criticised.  For example, even if a bank has verified the ID of a Foreign PEP customer when opening a bank account, the bank will have to confirm the ID of the customer every time the customer receives a loan from the bank using such account.  The NPA is very strict on this.  This restriction discourages financial institutions from having transactions with Foreign PEPs.

3.8          Are financial institution accounts for foreign shell banks (banks with no physical presence in the countries where they are licensed and no effective supervision) prohibited? Which types of financial institutions are subject to the prohibition?

Establishment of a shell bank is not permitted in Japan.

Also, banks and fund transfer businesses licensed or registered in Japan are required to make investigations as to whether the financial institution that it will enter into a correspondent agreement with is a shell bank or not (Article 9 of the AML Act).

3.9          What is the criteria for reporting suspicious activity?

There are basically two types of transactions that are subject to the submission of SARs.  One is transactions where the funds that the relevant financial institution or the DNFBP receives from the customer is suspicioned to be Criminal Proceeds, etc.  The other is transactions where the customer is suspicioned to be engaging in Money Laundering.  Also, government agencies supervising each type of Obliged Entities usually issue examples of transactions that would require the filing of SARs.

Lawyers, accountants and similar professions are exempted from submitting SARs.  They may submit SARs when they deem necessary, but they are not obliged to do so under Japanese law.

3.10        Does the government maintain current and adequate information about legal entities and their management and ownership, i.e., corporate registries to assist financial institutions with their anti-money laundering customer due diligence responsibilities, including obtaining current beneficial ownership information about legal entity customers?

Japanese legal entities are registered in the commercial registry administered by the government.  However, the name of shareholders will not be registered in the commercial registry.  

When a legal entity registers certain items requiring shareholders resolution, including the appointment of corporate officers, the applicant will need to submit an attached document listing names of principle shareholders and other items to the registrar, and third parties may request to view such attached document, if such third party has special interest to such resolution.  The Japanese government has shown an interpretation that the interest of financial institutions to conduct CDD appropriately may be considered in this respect, but the original purpose of such provision is not to facilitate CDD.  

Thus, the commercial registry is imperfect for such purpose.

3.11        Is it a requirement that accurate information about originators and beneficiaries be included in payment orders for a funds transfer? Should such information also be included in payment instructions to other financial institutions?

Yes, for both questions (Article 10 of the AML Act); provided, however, that this Article seems to be interpreted not to apply basically to card transactions (e.g. through Visa and MasterCard), as described in the Interpretive Notes to FATF Recommendation 16.

3.12        Is ownership of legal entities in the form of bearer shares permitted?

Yes.  The provision in the Companies Act referring to bearer shares has been abolished, but stating the name of the holder onto a share certificate is not obligatory (Article 216 of the Companies Act), so bearer shares do exist and are not prohibited.

3.13        Are there specific anti-money laundering requirements applied to non-financial institution businesses, e.g., currency reporting? 

No.  The regulations are basically the same for financial institutions and DNFBPs.

3.14        Are there anti-money laundering requirements applicable to certain business sectors, such as persons engaged in international trade or persons in certain geographic areas such as free trade zones?

(1)     In relation to the AML Act, the general rules for AML measures generally do not apply to lawyers and the rules of the Japan Federation of Bar Associations apply instead.  This creates some difference, but it is not that significant.

(2)     In relation to the Foreign Exchange and Foreign Trade Act, banks and funds transfer businesses are required to conduct CDDs when providing cross-border wire transfer or other funds transfer services to its customers.

Also, banks, securities companies, currency exchange businesses, and certain other types of financial institutions are obliged to conduct CDDs when providing services regarding certain cross-border capital transactions, including but not limited to loans, acceptance of deposits, and currency exchange.  The CDD measures required under the Foreign Exchange and Foreign Trade Act are basically equivalent with the CDD measures required under the AML Act.

(3)     Under tax related laws, banks and securities companies are basically required to ask the ‘My Number’ of the customer when opening an account, a social security and tax number given to each individual resident by the Japanese government.  The customer is required to verify the My Number using My Number Card or My Number Notice held by such customer or by a copy thereof.  Please note that the My Numbers need to be held in strict confidentiality.

4. General

4.1          If not outlined above, what additional anti-money laundering measures are proposed or under consideration?

No proposal is publicised at this moment.  However, after the FATF mutual evaluation report on Japan will be publicised (see question 4.3), I expect some amendment to the AML Act be enacted to implement changes that the FATF will recommend in such report.

4.2          Are there any significant ways in which the anti-money laundering regime of your country fails to meet the recommendations of the Financial Action Task Force (“FATF”)? What are the impediments to compliance?


  1. Only wire transfer services and similar services (or kawase torihki) are regulated and other types of money transfer services are not required to register and are not subject to AML regulations.
  2. Electronic money and prepaid cards are not regulated by AML regulations.
  3. Acquiring of credit cards, prepaid cards, and debit cards are not subject to AML regulations. 
  4. Finance lease, and currency exchange businesses are not subject to any permit, licence, authorisation nor registration requirements.
  5. Ongoing CDD measures are not required under the AML Act.  For financial institutions, there is a provision in the AML guideline demanding such measures, but there is no such guideline for non-financial institutions.
  6. Transactions with “Domestic” Politically Exposed Persons are not high-risk transactions.
  7. Pachinko, which is one type of casino which can be found all over Japan, is not regulated by AML regulations.
  8. No provision of beneficial ownership for trusts.

For more details, you can check out the below newsletter of mine:

4.3          Has your country’s anti-money laundering regime been subject to evaluation by an outside organisation, such as the FATF, regional FATFs, Council of Europe (Moneyval) or IMF? If so, when was the last review? 

Yes.  The last review was in the year 2008 and the report can be found at evaluationofjapan.html.

The next mutual evaluation process is expected to start in the year 2019 and to end over the following year.

4.4          Please provide information for how to obtain relevant anti-money laundering laws, regulations, administrative decrees and guidance from the Internet. Are the materials publicly available in English?

Laws, regulations and guidance can be found on the government website of Japan.

The English translation of Japanese laws in general can be found on the below website of the government.  However, some laws or their most current versions are not translated, yet. Please see

The AML Act was on the above website, but has been amended and is not on the website any more.

The translation of the AML Act and Enforcement Ordinance of the AML Act, before amendment can be found at the below website of NPA, but the contents are not up to date:

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