Financial institutions are expected to identify and assess their own money laundering and terrorist financing risks and to take mitigation measures in proportion to those risks (the risk-based approach)1. Under the law, specified business operators are required to verify clients' identifying information and other matters, keep transaction records, and report suspicious transactions2.

The measures for verifying clients overlap with KYC, but AML/CFT is a broader set of measures that also covers transaction records, monitoring, and reporting. Economic sanctions, which stop dealings with sanctioned parties, are rules under separate laws.

Notes

  1. Financial Services Agency, "マネー・ローンダリング及びテロ資金供与対策に関するガイドライン" (Guidelines on Anti-Money Laundering and Countering the Financing of Terrorism) (March 31, 2026), I-1 (page 1) and II-1 (page 6) (in Japanese). The abbreviation AML/CFT is the one used on the European Commission page. ↩

  2. "犯罪による収益の移転防止に関する法律" (Act on Prevention of Transfer of Criminal Proceeds, in Japanese), Article 1. ↩