AML/CFT and new technologies: Challenges in Japan

Hiroshi Ozaki

Journal of Financial Compliance, 2019, vol. 2, issue 4, 342-361

Abstract: In the first half of this paper, as a background, the current status and challenges that Japan and Japanese financial institutions are facing to enhance the AML/CFT regime and prepare for the FATF fourth Mutual Evaluation on Japan to be held in 2019, are described. A summary of the latest status report by Japanese Financial Services Agency (JFSA), ‘Current Status of AML/CFT as of August 2018’ is given. The report consists of mainly two parts; the recent measures taken by JFSA and the high level observations of the financial sector in Japan. In the latter half of the paper, a brief explanation is given of how the JFSA and some financial institutions in Japan are considering new technology tools to solve challenges such as the complexity of financial crime compliance, heightened regulatory scrutiny and the increasing costs, including investment costs, for systems and databases that affect the process of following a risk-based approach for anti-money laundering (AML)/countering the financing of terrorism (CFT) in Japan. As an example, efforts and trials by a Japanese bank in using new technology as a solution in action, such as robotic process automation (RPA) and machine learning to make the process of AML/CFT regime more effective and efficient are shown.

Keywords: AML/CFT; FATF; Mutual Evaluation; Review; Japan; new technologies; RPA; RegTech; FinTech (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2019
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