FATF: Japan improved compliance deficiencies, "minor deficiencies" still remain

The majority of Japan's deficiencies identified by the Financial Action Task Force in 2021 have been "largely addressed," according to the organization today.

The majority of the shortcomings listed in the nation's 2021 Mutual Evaluation Report have been fixed, although "minor deficiencies" still exist.

The Financial Action Task Force (FATF) today published a follow-up report on the nation's efforts to combat financial crime. The watchdog said that the nation has "made progress" in correcting the majority of its technical compliance flaws revealed in 2021.

As a result, the FATF has upgraded the nation's score on Recommendation 2, which deals with national cooperation and coordination, from Partially Compliant (PC) to Largely Compliant (LC).

Due to the "absence of clear responsibility for the definition of AML/CFT policies informed by risks and regularly reviewed" as well as for the "coordination of AML/CFT actions," Japan was given a Partially Compliant rating in its MER.

FATF also discovered that, despite the fact that AML/CFT authorities participate in frequent liaison meetings of data protection and privacy organizations, it was "unclear to what extent AML/CFT" was a "focus" of these discussions.

Japan has created an Inter-ministerial Council for AML/CFT & CPF Policy and released an AML/CFT/CPF action plan since the approval of this MER, which, according to the FATF, resolves "several deficiencies related to its national co-operation and coordination framework."

FATF claims that a small data protection breach found in the MER has not yet been fixed because it is "unclear" if the Council for AML/CFT & CPF Policy's mission would "fully satisfy the requirements of criterion 2.5."

FATF has concluded that Japan will be re-rated as largely compliant with this Recommendation as a result of these actions.

Japan is now categorized as Compliant on 4 Recommendations, Largely Compliant on 25, and Partially Compliant on 9 Recommendations.

According to FATF, Japan will continue to be monitored more closely and will keep the watchdog updated on its efforts to better implement AML/CFT measures.

By fLEXI tEAM