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investigations and crackdowns on other types of illegal activities.

Information on possible smugglers such as the existence of accounts or transactions with financial institutions, suspicious transactions such as large overseas remittances, overseas remittances by suspicious companies, and the existence of business partners can be confirmed or refuted based on the information contained in STRs. This helps authorities to remain aware of the transfer of funds that could possibly be criminal proceeds.

In addition, the Coast Guard requests information on possible smugglers to foreign FIUs through the National Police Agency. Provided with information on the possible smugglers as well as parties (individuals and companies) associated with said possible smugglers, the Coast Guard is able to ascertain previously undetected relationships.

4 Utilization of STRs by Customs

Customs maintains and shares a database of STRs. By referencing STRs with various types of information otherwise obtained by customs, customs can identify associations and apply said associations to investigations on Customs Act offenders. This strengthens initiatives to stop smuggling of items that pose a threat to public safety and security.

5 Utilization of STRs by the Securities and Exchange Surveillance Commission

The Securities and Exchange Surveillance Commission conducts investigations of potentially criminal cases with a view to criminal prosecution on malicious activity in the financial instrument trading sector, including fraudulent securities reports (fraudulent accounting) and insider trading, as well as share manipulation and other fraudulent means.

As part of the process of criminal investigation, the Commission uses its own methods to identify and analyze relevant bank accounts or securities accounts that may be used in unfair trading. In addition, utilization of STRs helps to put the criminal cases in its proper light.

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Chapter 5

In order to take effective anti-money laundering (AML) measures, it is essential to understand the scale and modus operandi of money laundering.

In Japan, money laundering is criminalized as follows: the control of management of enterprises of legal persons and other entities through illicit proceeds (Article 9), the concealment of criminal proceeds etc. (Article 10) and the receipt of criminal proceeds etc. (Article 11) which are all stipulated in the Act on Punishment of Organized Crimes, and also the concealment of drug-related criminal proceeds etc. (Article 6) and the receipt of drugrelated criminal proceeds etc. (Article 7) both stipulated in the Anti-Drug Special Provisions Law. They include typical money laundering activities such as transferring criminal proceeds to a certain place so that these proceeds would not be traceable and depositing criminal proceeds in a bank account under the name of another person, although all the activities to transfer criminal proceeds are not yet covered.

In addition, penalties for the violation of supervision mechanisms issued by competent administrative authorities to specified business operators and penalties for the transfer or receiving of bank account passbooks are stipulated in the Act on Prevention of Transfer of Criminal Proceeds.

The AML achievements in Japan can be grasped to some extent by looking into the number of cleared cases related to money laundering. The amounts of criminal proceeds confiscated also reflects the effectiveness of the AML measures.

Section1 Arrests made for the violation of the Act on

Prevention of Transfer of Criminal Proceeds in 2012

The Act on Prevention of Transfer of Criminal Proceeds stipulates penalties to ensure the effectiveness of supervisory mechanisms put in place by the competent administrative authorities over specified business operators and penalties on the trade of savings passbooks, and the police is enhancing its efforts to crack down on such practices. Numerous money laundering crimes involve the illicit use of savings passbooks in the name of another party. The number of arrests made for the illicit transfer of savings passbooks in 2012 was 1,544 (see Table 5-1).

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In addition, Postal Receiving Service Providers were arrested for violations of Rectification Orders for the first time since the enforcement of the Act on Prevention of Transfer of Criminal Proceeds.

Table 5-1 Number of punishments made under the Act on Prevention of Transfer of Criminal Proceeds

Note: For actions committed before March 1, 2008, the Customer Identification Act applies.

Section 2 Cleared Cases of Money Laundering in 2012

Paragraph 1 Cleared Cases of Money Laundering under the Act on Punishment of Organized Crimes

1 Number of Cleared Cases

There were 238 cases cleared of money laundering under the Act on Punishment of Organized Crimes in 2012, consisting of 158 cases of concealment of criminal proceeds etc. (note) and 80 cases of receipt of criminal proceeds etc. (see Table 5-2)

(note) Criminal proceeds etc. means proceeds from criminal activities, assets deriving from criminal proceeds, or assets mixed with other assets.

Table 5-2 Number of Arrests Made for Money Laundering under the Act on Punishment of Organized Crimes

Note: Each number in brackets represents the number of cases conducted by Boryokudan gangsters.

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Case 3 Concealment of criminal proceeds etc. from grand theft

A few unemployed men stole ¥160 million in cash from the home of a company executive, concealing approximately ¥150 million of it under the ground in the mountain forests. They were arrested for violation of the Act on Punishment of Organized Crimes (concealment of criminal proceeds etc.). (Kumamoto, in September)

(2)Examples of Receipt of Criminal Proceeds etc.

In the cases on receipt of criminal proceeds which were cleared in 2012, there are cases where offenders received criminal proceeds derived from prostitution, theft, fraud, etc., which shows these criminal proceeds can be transferred to other individuals in diverse ways.

Case 4 Receipt of stolen goods including stolen vehicles with compensation and receipt of criminal proceeds etc

An unemployed man asked an acquaintance to steal a vehicle, purchasing the vehicle and two license plates for ¥50,000. He was arrested for the receipt of stolen goods with compensation as well as the violation of the Act on Punishment of Organized Crimes (receipt of criminal proceeds).

(the Metropolitan Police Department, in February)

Case 5 Receipt of criminal proceeds etc. related to violation of the Anti-Prostitution Act

A male former manager of a non-storefront type sex parlor received approximately ¥460,000 from the current proprietor, though he was aware that the funds had been obtained through prostitution, in return for mobile phones and other items for use in communication with customers. He was arrested for violating the Act on Punishment of Organized Crimes (receipt of criminal proceeds). (Shiga, in July)

3 Money Laundering Cases related to Boryokudan Gangsters.

There were a total of 55 cases cleared of money laundering related to Boryokudan gangsters including Boryokudan members, associates, and other related parties in 2012, consisting of 27 cases of concealment of criminal proceeds etc., and 28 cases of receipt of criminal proceeds etc. This number accounts for 23.1% of all cases cleared of money laundering under the Act on Punishment of Organized Crimes in 2012.

In each type of cases of money laundering related to Boryokudan gangsters, there were 17 cases of fraud, 10 cases of theft, 7 cases of illegal loaning, and 6 cases of prostitution offences. This indicates that Boryokudan gangsters commit money laundering by a variety of predicate offences.

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Case 8 Concealment of criminal proceeds of international large-sum fraud

A senior mender of the Kyokuto-kai, a Nigerian man and others worked together to remit funds from a fraud case in the United States in the sum of approximately ¥24 million to a bank account in Japan. They misled the bank that the funds were paid for products. Subsequently, when completing the withdrawal procedures, they submitted transaction sheets with the false statement that the funds were paid for products, and consequently gave a false appearance that the funds were fairly obtained in business. They were arrested for violation of the Act on Punishment of Organized Crimes (concealment of criminal proceeds etc.). (Niigata and the Metropolitan Police Department, in December)

(2)Examples of Receipt of Criminal Proceeds etc. related to Boryokudan Gangsters

Cleared cases of receipt of criminal proceeds etc. by Boryokudan gangsters in 2012 consisted of 8 cases of fraud and 6 cases each of prostitution and theft.

Cases of receipt of criminal proceeds etc. included protection money and contributions to the gangster organizations, providing an indication of how Boryokudan gangsters obtain criminal proceeds through the power or force of the organization.

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Paragraph 2 Cleared Cases of Money Laundering under the Anti-Drug Special Provisions Law

The total number of cleared cases of money laundering under the Anti-Drug Special

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Provisions Law in 2012 was 11 (see Table 5-3).

In some cases, money laundering is artfully committed for funds acquired through drug offences such as smuggling of stimulants, in which purchasers’ payments are deposited into a bank account under the name of another party (Case 12)

Note: Drug criminal proceeds etc. are comprised of drug criminal proceeds and proceeds stemming from drug offense proceeds, or a mix of said proceeds and other funds. (Article2, Paragraph 3 to 5 of the AntiDrug Special Provisions Law).

Table 5-3 Number of arrests made for money laundering under the Anti-Drug Special Provisions Law

Note: Each number in brackets represents the number of cases conducted by Boryokudan gangsters.

Case 12 Concealment of drug criminal proceeds from the illicit sale of stimulants by a female drug trafficker

An investigation of stimulant end abusers revealed a female supplier, leading to a widespread search of affiliated offenders and the arrest of the woman on violations of the Stimulants Control Act (possession). Upon examination of a deposit passbook confiscated during the search, the female trafficker had utilized a bank account in another party’s name for trafficking purpose. Remittances of approximately ¥1.4 million from customers purchasing stimulants had been made to this account. She also misrepresented herself as having no income, thereby unfairly receiving public assistance. She was arrested for violations of the Stimulants Control Act (concealment of drug criminal proceeds etc.) and for fraud charges. (Ishikawa in February)

Section 3Temporary Restraining Orderfor Confiscation of Criminal

Proceeds before Institution of Prosecution in 2012

In order to prevent criminal proceeds from being used to maintain and expand the powers of criminal organizations and being used to invest in future criminal activities, it is important to deprive them. Confiscation and collection of equivalent value of criminal proceeds are

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