Japan has not done enough to combat money laundering, an international watchdog said on Friday, urging the government to adopt measures such as legislation that criminalizes terrorist financing.
The Financial Action Task Force (FATF) in Paris referred to its 2008 report on Japan, which highlighted deficiencies such as a lack of internal controls among financial institutions to prevent and detect illicit money transfers, Reuters reported on Saturday.
“The FATF is concerned by Japan’s continued failure to remedy the numerous and serious deficiencies identified in its third mutual evaluation report adopted in October 2008 despite Japan’s high-level political commitment,” it said in its statement on Friday.
The FATF is an inter-governmental body backed by 34 countries and jurisdictions that establishes standards for measures designed to combat money laundering, terrorist financing and other threats to the financial system.
The FATF did not mention any specific actions Japan needed to take, nor did it add Japan to its blacklist of high-risk and non-cooperative jurisdictions.
But the FATF’s call-out follows a late December 2013 mob loan scandal involving Mizuho Financial Group. Mizuho Financial was punished by Japan’s regulator, the Financial Services Agency, for making ¥200 million ($1.9 million) of loans through its consumer-finance affiliate to criminal organizations, referred to as yazuka crime groups.
The Mizuho case highlighted how widespread organized crime groups are in Japanese society and business.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.