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Japan’s Financial Services Agency (FSA) has strictly directed financial institutions to devise a plan for ensuring complete compliance with Anti-money Laundering regulations by March 2024.
Japan: The FSA has set a hard deadline for March 2024, directing financial institutions to implement all necessary measures to stay compliant with its Anti-money Laundering (AML) and Combating the Financing of Terrorism (CFT) guidelines.
The guidelines that were published in February 2018, and updated in April 2019 and February 2021 respectively, mandate Japanese financial institutions to employ a risk-based approach for AML/CFT compliance. Compliance with such regulations must be in line with the Recommendations of the Financial Action Task Force (FATF).
The latest amendments in the guidelines revolved around the following:
- Better management of customer-related and product-related risk
- Implementation of customer risk assessment
- Rapid screening of every business entity and customer that is onboarded
- Reporting of suspicious activities for a better risk analysis
In a notice published on 31 May, the FSA revealed that they had found substandard monitoring procedures being implemented by financial institutions.
To amend this situation and bring compliance procedures back to the top of the priority list, the FSA has asked FI’s to devise necessary plans for the implementation of its AML compliance guidelines by March 2024.
To ensure that FI’s are obliging with these guidelines, the FSA will continue to conduct strict monitoring of financial institutions. This way, the agency will be able to ensure that adequate systems are in place.
Suggested Read: AML Screening in the light of Compliance Regimes Around the Globe
A Tip For Japanese Financial Institutions
Any financial institution that needs to ensure compliance with global AML and CFT regulations needs to invest in fully automated identity verification solutions. These solutions automate the entire process of onboarding, starting from the initial stage of account opening to the final verification results. With ongoing monitoring and AML screening practices enabled by AI-powered solutions, hefty non-compliance fines can be effectively deflected.