As Japan is a major trading power, the authorities there may be about to take more steps to identify and combat trade-based financial crime, particularly given Prime Minister Shinzo Abe’s faith in the abilities of the Japanese Financial Services Agency (FSA) to help consolidate global faith in Japan’s economy.

So Japan’s financial regulator may be sharpening its focus on trade-based financial crime as it steps up scrutiny of banks’ anti-money laundering and counter financing of terrorism (AML/CFT) measures ahead of checks by the Financial Action Task Force (FATF) in two years’ time.

Criticism

Japan has faced sharp criticism in the past from FATF, which has reported several times on what it once described as the country’s “continued failure to remedy the numerous and serious deficiencies,” in its AML/CFT regime.

Although the Japanese government continues to strengthen legal institutions to permit more effective AML/CFT laws, Japan’s compliance with international standards specific to financial institutions has now drawn criticism from the country’s own regulator, sources recently told the Reuters news agency.

Trade focus

The FSA sees banks’ measures to fight financial crime as patchy and is increasingly concerned that without an appropriate response, international trust in the system could be shaken.

The Japanese regulator is currently surveying the banks and will compile results this summer before making plans to bolster standards before the 2019 FATF evaluation of Japan’s overall performance.

Scrutiny

The FSA began its scrutiny in March, and has started collecting responses aimed at gauging banks’ awareness of money laundering and financing of terrorist groups.

The regulator is now expected to focus on how banks have responded to legal changes designed to combat money laundering and financing of terrorism, Reuters’ sources said.

Categories: Trade Based Financial crimes News