The government on Friday approved a bill to establish a system to freeze the assets of internationally active terrorists in the country.
At a Cabinet meeting, the government also approved a bill to revise a law on the prevention of the transfer of criminal proceeds so that the country can strengthen its preventive measures against money laundering.
The bills, both of which will be submitted to the ongoing extraordinary session of the Diet, reflect strong recommendations from the Financial Action Task Force, an international group that sets standards for measures against money laundering, National Police Agency officials said.
The FATF said in June it was “concerned by Japan’s continued failure to remedy the numerous and serious deficiencies” in its measures against money laundering and terrorist financing.
If Japan fails to follow the FATF recommendations, it could be treated as a “high-risk” country, like Afghanistan and Iraq, in which financial institutions are refused foreign transactions.
The asset freeze bill will restrict transactions in Japan by people who have been designated as international terrorists by the U.N. Security Council and other organizations.
These persons will be required to obtain permission from prefectural public safety commissions when they pay, lend, obtain or borrow money as well as when they buy or sell securities, precious metals, real estate or cars.
Public safety commissions will be authorized to order people who manage assets of terrorists to submit the assets, excluding money needed for daily living and paying taxes, so that authorities can keep them.
Terrorists’ transactions between Japan and foreign countries are restricted under the foreign exchange and foreign trade law. But Japan has no law restricting domestic transactions by terrorists.
The foreign exchange law covers 360 people and 89 organizations, including those related to Al-Qaida and the Taliban, who have been designated as terrorists and terrorist groups mainly by the U.N. Security Council. No Japanese person or organization is on the list.
The National Public Safety Commission will hold talks with relevant government agencies to select terrorists who will be covered by the planned law. The coverage is likely to be the same as the foreign exchange law.
Currently, none of the 360 designated people or managers of their assets are believed to be in Japan, the NPA officials said.
The bill to prevent money laundering lays out rules and procedures to identify suspicious transactions that financial institutions must report to authorities.
The bill also has a provision requiring financial institutions to make efforts to strengthen their measures against money laundering by introducing customer management officers and through other means.