Japan Country Summary

FATF Status

Japan is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Japan was undertaken in 2024. According to that Evaluation, Japan was deemed Compliant for 4 and Largely Compliant for 35 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 3 of the Effectiveness & Technical Compliance ratings.

Japan's crime landscape is characterized by a relatively low incidence of official corruption, although recent scandals involving the ruling Liberal Democratic Party (LDP) highlight ongoing issues with transparency and accountability in political funding. While organized crime, particularly the Yakuza, is in decline due to stricter regulations, new forms of crime, such as cybercrime and financial fraud, are on the rise, indicating a shift in criminal activities within the country.

Japan, as the world's fourth-largest economy and a key trading partner of the United States, presents a complex investment climate characterized by significant potential yet notable challenges. Despite its wealth and development, Japan's foreign direct investment (FDI) stock remains the lowest among OECD countries, prompting government initiatives aimed at doubling FDI by 2030 through supportive legal frameworks and regulatory reforms. While Japan offers a robust legal environment for investors, issues such as traditional corporate aversion to mergers and acquisitions, inflexible labor laws, and cultural barriers continue to hinder foreign investment, necessitating ongoing structural reforms to enhance economic growth and returns on investment.