Statement on Amendments to the Act on the Prevention of Transfer of Proceeds from Crimes
The Financial Action Task Force, which is the intergovernmental body promoting money laundering countermeasures, issued a statement in June 2014 to the Japanese government to swiftly implement sufficient money laundering countermeasures. In response, the Act on the Prevention of Transfer of Proceeds from Crimes (the “Act”) was partially amended on November 19, 2014 and the amended Act (the “Amended Act”) came into force on October 1, 2016.
As an organization having a high degree of self-regulation, the Japan Federation of Bar Associations (the “JFBA”) obligated lawyers through its regulations to verify the identity of clients and to maintain records. As the regulations applicable to other professions were changed due to the Amended Act, the JFBA passed a resolution to partially amend the “Rules Concerning Client Identity Verification and Record Preservation, Etc.” (the “Rules”) in an extraordinary general meeting held on December 4, 2015. Additionally, in a meeting on January 22, 2016 the JFBA’s board of directors passed a resolution to partially amend the “Regulations Concerning Client Identity Verification and Record Preservation, Etc.” (the “Regulations”). Concretely, these amendments sought to bolster existing regulations by: (i) the presentation of a document without an ID photograph for the verification of the identity of an individual is not sufficient and requiring additional supplementary methods, (ii) making it compulsory to double check the identity of foreign politically exposed person , (iii) verification of the authority of an individual who represent the client which is a juridical person and (iv) making it compulsory to develop internal systems within law offices to ensure that the verification of clients’ identity should be adequately undertaken. The details of these new rules and regulations amply satisfy the matters prescribed in the Amended Act.
From the time of the enactment of the 2007 Act, the JFBA has firmly maintained a position opposing the reporting on the suspicious transactions of clients and, under the Amended Act as well, lawyers will bear no obligation to report on clients. On the other hand, naturally, lawyers must not in any way assist with money laundering. In the Rules obligations are imposed on lawyers to carefully investigate whether the purpose of the engagement is related to the transfer of criminal proceeds so that lawyers are not involved in or used for money laundering and, when a lawyer knows that the purpose relates to the transfer of criminal proceeds, obligations are imposed on the lawyer to persuade the client to refrain from the achievement of that objective (Articles 6 through 8 of the Rules). These obligations are not prescribed in the Act and particular to the JFBA rules and, when taking into consideration of the professional mission of lawyers, we resolved to not merely verify the identity of clients but to proactively take steps to prevent the transfer of criminal proceeds.
The JFBA, exerting every effort, will make the new rules and regulations fully known to its members and actively provide them with training so that lawyers do not become involved in or be used for money laundering.
January 22, 2016
Japan Federation of Bar Associations