President's Statement on the Imposition of a Legal Obligation on Japan's Lawyers to Report "Suspicious Transactions"
In June 2003 the Financial Action Task Force (FATF), a body charged with taking measures against funding of international terrorism, recommended that, in order to combat money laundering and financing of terrorism, an obligation to report certain "suspicious transactions" - such as the purchase or sale of real estate - to financial intelligence units (FIUs) be imposed on lawyers and other professionals, as well as financial institutions as heretofore. In response, last December the Japanese government's Headquarters for the Promotion of Measures Against Transnational Organized Crime (TOC) and Other Relative Issues and International Terrorism compiled an Action Plan for Prevention of Terrorism, which decided on full implementation of the FATF’s recommendations.
The FATF’s recommendations have provoked the opposition of lawyers across the globe, for the obligation to report clients' suspicious transactions threatens the very essence of the legal profession. The JFBA for its part has announced its opposition to any legislation in Japan designed for the purpose of full implementation of the FATF's recommendations.
Nonetheless, the need to fight terrorism is real; and the JFBA believed that if matters could be arranged such that lawyers' reports of suspicious transactions were screened by the JFBA before submission to the Financial Services Agency - of which Japan's financial intelligence unit (FIU) was then part - it would be possible to create a system that was less invasive of citizens' trust in lawyers and of the independence of lawyers. In that conviction, the JFBA entered into talks with the relevant agencies.
On November 17, 2005, however, the Japanese government decided to transfer the FIU from the Financial Services Agency to the National Police Agency as part of its efforts to put in place legislation to implement the FATF recommendations.
An obligation to report to the National Police Agency threatens the independence of lawyers and bar associations from state power, which independence is the very cornerstone of their existence; undermines the trust of citizens in them; and shakes the very foundations of their profession.
The JFBA is therefore utterly unable to accept the government's decision. While working to obtain the understanding of Japanese from all walks of life, we intend to mount an energetic campaign of opposition in partnership with lawyers and bar associations in other countries.
Japan Federation of Bar Associations
November 18, 2005