JAPAN Law and Practice Contributed by: Tomoyuki Tanaka and Henry Tan, Anderson Mori & Tomotsune
The verification is required at the time of spe - cific transactions, which include opening deposit accounts, cash transfers of more than JPY100,000 and lending money. Under the APTCP, local banks are required to prepare and preserve records of the verified information collected at the time of transactions and the measures taken to verify customers for seven years from the day of termination of the relevant transactions. Local banks are also required to prepare and preserve the records of transactions for seven years from the day of commencement of the relevant transactions. Local banks are required to determine wheth - er property accepted from a customer is sus - pected to have come from criminal proceeds in light of the results of verification at the time of a transaction and other circumstances, consider - ing the recommendations of the National Risk Assessment of Money Laundering and Terror - ism Financing Report published by the National Public Safety Commission every year. If prop - erty accepted from a customer is suspected, based on the results of verification at the time of transaction and other circumstances, to have come from criminal proceeds or the customer is suspected of committing a certain crime, local banks must promptly report the transaction to the FSA. The FSA, upon receipt of the report, will promptly notify the National Public Safety Commission. If the National Public Safety Commission believes the information to be useful for investigation of criminal cases conducted by public prosecutors, the police or other investigators, it will provide the information to the investigators. The FSA published the Guidelines for Anti-Mon - ey Laundering and Combating the Financing of
Terrorism (the “AML/CFT Guidelines”) to clarify the Japanese government’s basic stance on risk management practices against money launder - ing and terrorism financing to encourage finan - cial institutions to improve their internal systems for the prevention of money laundering and ter - rorism financing. Based on the risk-based approach recom - mended by the Financial Action Task Force (the “FATF”), the AML/CFT Guidelines clarify “required actions”, which, if not taken, may result in administrative actions being imposed by the FSA, such as the issuance of report - ing orders and business improvement orders against offenders. The AML/CFT Guidelines also stipulate the management systems and actions expected to be implemented by each financial institution, such as the formulation of “plan-do- check-act” (“PDCA”) procedures. This is to ensure the involvement and under - standing of management in the prevention measures and define the respective roles and responsibilities of the business, system control and internal audit divisions. The FSA has also provided clarification on the manner in which it will monitor the implementa - tion of these actions and provided examples of best practices based on its monitoring activi - ties and the experience of financial institutions overseas. 6. Depositor Protection 6.1 Deposit Guarantee Scheme (DGS) Japan has a deposit insurance system that pro - tects depositors in the event of a systemic fail - ure in the banking sector. Act No 34 of 1971 (the “Deposit Insurance Act”) (as amended) pro -
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