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 high-ranking politicians have raised concerns about the integrity of political financing. While organized crime, particularly through the Yakuza, has seen a decline due to stricter regulations, issues such as human trafficking, cybercrime, and financial fraud remain significant challenges, exacerbated by the COVID-19 pandemic and evolving criminal tactics.

Japan, the world's fourth-largest economy and a significant player in global trade, is characterized by a relatively low level of foreign direct investment (FDI) relative to its GDP, despite its openness to such investments. The Japanese government aims to increase inward FDI stock to approximately $667 billion by 2030, recognizing the need for structural reforms to enhance asset returns and economic growth. While Japan offers a favorable legal and regulatory environment for investors, challenges remain, including a traditional aversion to mergers and acquisitions, rigid labor laws, and a complex corporate governance landscape that can deter foreign investment.