Introduction

The Act Partially Amending the Act on Prevention of Transfer of Criminal Proceeds (the “Amending Act”) was enacted by the 221st Session of the Diet and promulgated on June 10, 2026 (Act No. 34 of 2026).
The key amendments implemented by the Amending Act (collectively, the “Amendments”) 

1. Increased penalties for the unlawful transfer or receipt of bankbooks and other deposit account instruments;
2. Introduction of new penalties for so-called “money transfer mules”; and
3. Introduction of new measures targeting the use of so-called “fictitious-name accounts.”

The first and second Amendments above took effect on July 10, 2026. The effective date of the third Amendment will be specified by Cabinet Order within one year from the date of promulgation of the Amending Act.

The Amendments were introduced in response to the Report on Measures to Combat Money Laundering through the Abuse of Financial Services, published by the National Police Agency and the Japan Financial Intelligence Center (JAFIC) in December 2025. For further details, please see our previous article, “[Act on Prevention of Transfer of Criminal Proceeds] Overview of the December 2025 Report on Measures to Combat Money Laundering through the Abuse of Financial Services and Developments Regarding Amendments to the Act on Prevention of Transfer of Criminal Proceeds.”

Separately from the Amendments, the methods for verifying the identity of customers will also be revised through amendments to the Enforcement Regulations of the Act on Prevention of Transfer of Criminal Proceeds. These amendments will take effect on April 1, 2027. For further details, please see our previous article, “[Act on Prevention of Transfer of Criminal Proceeds] Stricter Customer Identification Requirements under the Amended Enforcement Regulations.”

Overall Framework of the Amendments

The Act on Prevention of Transfer of Criminal Proceeds (the “Act”) requires specified business operators to implement measures to prevent money laundering, including conducting customer due diligence (such as verifying the customer’s identification information) and filing suspicious transaction reports. In addition to this existing framework, the Amendments introduce and increase criminal penalties (first two Amendments) and establish new investigative measures (third Amendment).

While the revisions to customer identification methods constitute an administrative response, the Amendments are primarily criminal-law measures. Taken as a whole, these developments reflect the government’s intention to address the challenging issue of preventing losses from special fraud through a comprehensive approach encompassing both administrative and criminal law measures.

Amendment One: Increased Penalties for the Unlawful Transfer of Bankbooks and Other Deposit Account Instruments (Articles 25–31 of the Act)

Before the Amendments, the unlawful transfer of bankbooks, cash cards, and similar instruments was already subject to criminal penalties under the former Articles 28 and subsequent provisions of the Act. The Amendments, however, have substantially increased the applicable statutory penalties.

• Ordinary cases: Imprisonment for up to one year or a fine of up to JPY 1 million → imprisonment for up to three years or a fine of up to JPY 5 million
• Where conducted as a business: Imprisonment for up to three years or a fine of up to JPY 5 million → imprisonment for up to five years or a fine of up to JPY 10 million

As a result of the increased statutory penalties, acts committed as a business will now fall within the scope of the Act on Punishment of Organized Crimes and Control of Proceeds of Crime. For example, where a person unlawfully transfers a large number of bankbooks or similar instruments as a business, the consideration received in return may constitute “proceeds of crime” under the Act on Punishment of Organized Crimes and Control of Proceeds of Crime. The penalties for soliciting or inducing such acts, as well as for a customer or its representative or other relevant person making a false statement concerning identification information (Article 25 of the Act), have likewise been increased.

The substantial increase in statutory penalties, together with the designation of business-related unlawful transfers as predicate offenses under the Act on Punishment of Organized Crimes and Control of Proceeds of Crime, signals the authorities’ strong intention to identify and prosecute the unlawful transfer of bankbooks and similar instruments as a serious criminal offense and a key infrastructure facilitating organized crime. If financial institutions and other relevant businesses were to overlook such unlawful activities and their services were consequently exploited for money laundering by organized criminal groups, the financial institutions could face significantly heightened risks of administrative sanctions for deficiencies in their compliance frameworks, as well as serious reputational damage.

Financial institutions and other relevant businesses will therefore need to take robust preventive measures to ensure that their services do not facilitate organized crime. In practice, this is likely to require stricter screening at the time of account opening, as well as enhanced systems for identifying and reporting suspicious transactions in relation to existing accounts.

Amendment Two: Introduction of New Penalties for “Money Transfer Mules” (Article 32 of the Act)

“Money transfer mules,” also referred to as “money transfer crimes,” involve transferring funds through an account held in the transferor’s own name at the request of another person. 

Although arranging for another person to act as an intermediary in transferring funds serves a function similar to the unlawful use of an account held in another person’s name and can therefore be viewed as an attempt to circumvent the law, the former Article 28 of the Act (Article 25 following the Amendments) required, among other things, that the provision of account information be intended to facilitate impersonation or be necessary to obtain the provision of services. Accordingly, where the account holder continued to use his or her own account while acting as an intermediary for fund transfers, it was difficult to apply that provision directly to either the person requesting the transfer or the account holder.

To address this gap, new Article 32 introduces criminal penalties for, among other conduct, “requesting another person, for consideration, to use services provided under a deposit account agreement or similar arrangement to transfer property for the purpose of transferring property managed or intended to be managed by the requester or a third party, without any legitimate reason, including where the transfer is made in the ordinary course of a commercial or financial transaction.”

Paragraph 1 of Article 32 applies to requesting another person to carry out a money transfer crime, as well as soliciting or inducing another person through advertisements or similar means to do so. Paragraph 2 applies to carrying out a money transfer crime at the request of another person, as well as soliciting or inducing another person to make such a request. Paragraph 3 provides for enhanced penalties where such conduct is carried out as a business.

The statutory penalties are as follows:

• Under Paragraphs 1 and 2: Imprisonment for up to two years or a fine of up to JPY 3 million
• Where conducted as a business: Imprisonment for up to three years or a fine of up to JPY 5 million

The concept of a “specified property transfer using services” (tokutei yakumu riyō zaisan iten kōi) is central to the elements of this offense. Article 32, paragraph 4 identifies the following three types of conduct as falling within this concept:

1. Transferring property to a person other than oneself using services provided under a deposit account agreement or similar arrangement;
2. Transferring all or part of property corresponding to property received using such services to a person other than oneself; and
3. Agreeing to receive property using such services and transferring all or part of property corresponding to that property to a person other than oneself.

The financial services that may be exploited for such purposes are not limited to bankbooks, cash cards, online accounts, and similar services provided by banks and other financial institutions. Article 32, Paragraph 4, Item 1 defines “services provided under a deposit account agreement or similar arrangement” broadly. In addition to services provided by deposit-taking institutions, the definition covers services provided by certain prepaid payment instrument issuers, electronic payment instrument exchange service providers, electronic payment service providers, crypto-asset exchange service providers, and other specified businesses, as well as certain remittance services provided through foreign exchange transactions. Accordingly, the provision may also apply to transfers of property to another person using, for example, certain crypto-asset wallets (information used for crypto-asset exchange) or accounts maintained by an electronic payment instrument exchange service provider that enable transactions involving stablecoins.

The scope of the exemptions from Article 32 will also be important in practice. There are various circumstances in which a person may use his or her own account to act as an intermediary in transferring funds, many of which constitute socially beneficial transactions. Article 32 therefore excludes from its scope certain remittance intermediary activities carried out as part of legitimate socioeconomic activities by requiring both “consideration” and “legitimate reason” as elements of the offense.

The authorities have provided explanations of each of these requirements in the source materials set out below.

・“Legitimate reason” requirement:　https://www.npa.go.jp/bureau/sosikihanzai/hansyu/hanshu-20260610_ponti.pdf

・“Consideration” requirement: https://www.npa.go.jp/bureau/sosikihanzai/hansyu/hanshu-20260610_ponti.pdf

Amendment Three: New Measures Utilizing “Fictitious-Name Accounts” (Measures to Prevent the Criminal Use of Accounts, etc.)

The third Amendment introduces a new investigative mechanism under Chapter IV-2, “Measures to Prevent the Criminal Use of Accounts, etc.” (Articles 19-2 through 19-29 of the Act). The new framework will enable the police, with the cooperation of financial institutions and other relevant entities, to open deposit accounts and other accounts subject to special measures concerning the display of the account holder’s name and other identifying information (so-called “fictitious-name accounts”).

Police officers may take measures to prevent deposit accounts and other accounts from being used for criminal purposes, including transferring the bankbooks or other instruments associated with such accounts to persons who solicit or otherwise induce the unlawful transfer of bankbooks and similar instruments. Given the nature of this framework, the Act also provides that police officers may, to the extent necessary, refrain from disclosing their official status or other identifying information.

Where funds or other property are transferred to, or deposited into, a fictitious-name account, the property deposited will, in principle, be returned to the victims or other entitled persons. Any property that is not returned will, following certain procedures, be used to fund payments to other victims for the purpose of providing relief for losses suffered as a result of crime (so-called “Specified Crime Victim Recovery Benefits”). Any funds remaining thereafter are to be used by prefectural governments, to the extent practicable, for measures to support crime victims and other persons affected by crime.

For financial institutions, practical issues may include how to coordinate with investigative authorities and how to manage and operate accounts established under this framework. The provisions relating to this framework will take effect on a date to be specified by Cabinet Order within one year from the date of promulgation (June 10, 2026).

Practical Considerations

The increased penalties and the new provisions criminalizing money transfer mule activities under the first and second Amendments took effect on July 10, 2026. Because Article 32 is a criminal provision that applies to both individuals and legal entities, both individuals and corporations may potentially be subject to liability if they use their own deposit accounts or similar accounts to facilitate fund transfers.

In particular, where such activities are conducted by a business operator, they are likely to involve consideration, making the existence of a “legitimate reason” an important issue. For example, where a business operator is asked to facilitate a transfer by a counterparty with which it has no ongoing business relationship, it will be necessary to carefully verify not only the identity and background of the counterparty, but also the contractual basis for the purpose of the transfer and whether there is a genuine need to facilitate the transfer in the first place. Because the Act contains provisions imposing joint criminal liability on corporations and their officers, employees, or other relevant individuals, a violation may result in criminal liability for both the corporation and the individuals involved in the conduct.

The key distinction between the newly established offense under Article 32 and the existing money laundering offenses under Articles 10 and 11 of the Act on Punishment of Organized Crimes and Control of Proceeds of Crime—namely, the offenses of concealment or receipt of criminal proceeds, etc.—lies in whether an underlying predicate offense has been committed and knowledge (including dolus eventualis) that the property constitutes criminal proceeds, etc. are elements of the offense. The existing money laundering offenses presuppose that the property concerned constitutes “criminal proceeds, etc.” obtained objectively through a specified offense, such as special fraud or theft, and require the perpetrator to have knowledge that the property constitutes criminal proceeds, etc., including in the form of dolus eventualis. By contrast, Article 32 independently criminalizes the act of transferring funds using an account or similar service, for consideration and without a legitimate reason, regardless of whether the property being transferred originates from legitimate or illicit sources.

Accordingly, where a person knowingly participates in a money transfer mule scheme involving proceeds of special fraud, both the Article 32 offense (a violation of the Act on Prevention of Transfer of Criminal Proceeds) and the existing offense of concealing or receiving criminal proceeds, etc. (a violation of the Act on Punishment of Organized Crimes and Control of Proceeds of Crime) may be established. In such circumstances, the two offenses would likely constitute a case of ideal concurrence of offenses under the first sentence of Article 54, paragraph 1 of the Penal Code, because a single act gives rise to multiple offenses.

During Diet deliberations, the Committees on Cabinet Affairs of both the House of Representatives and the House of Councilors adopted supplementary resolutions calling for greater public awareness that money transfer mule activities are unlawful. This underscores the need for greater public awareness concerning the illegality of such conduct. In particular, service providers—including not only banks and other financial institutions but also businesses handling crypto-assets and stablecoins—are expected to take proactive steps to alert users, particularly younger users who may be at heightened risk of becoming involved in money transfer mule schemes.

In preparation for the implementation of the fictitious-name account framework under the third Amendment, key issues are likely to include the details of the operational procedures to be prescribed by National Public Safety Commission rules, the scope of cooperation expected from financial institutions, and the specific requirements for the payment of Specified Crime Victim Recovery Benefits.  Another key consideration will be ensuring that the framework keeps pace with technological innovation in areas such as fintech and crypto-assets, while maintaining its effectiveness in light of Japan’s upcoming fifth-round FATF mutual evaluation.

The rapid development of fintech in recent years has resulted in crypto-assets and electronic payment instruments, including stablecoins, creating global infrastructure for instantaneous and highly anonymous transfers of funds without the need to use traditional bank accounts. Against this backdrop, the fact that Article 32, Paragraph 4, Item 1 broadly includes services provided by crypto-asset exchange service providers and electronic payment instrument exchange service providers within the scope of “services provided under a deposit account agreement or similar arrangement” for purposes of the “specified property transfer using services” subject to criminal penalties appears intended to address the misuse of advanced technologies, including sophisticated money transfer mule schemes conducted in digital platforms.

At the same time, as new payment technologies continue to emerge, it will be necessary to continually assess and update the regulatory framework to ensure that its scope remains consistent with technological developments. Accordingly, practical issues are likely to arise as these technologies evolve.

International standards, including the FATF Recommendations, strongly encourage member jurisdictions to establish “effective, proportionate and dissuasive” law enforcement frameworks, encompassing both criminal and administrative measures, in relation to emerging means of transferring funds, including virtual asset service providers (VASPs). In its fourth-round mutual evaluation, Japan narrowly met the technical compliance threshold for its legal and regulatory framework but was assessed as falling somewhat short of the level achieved by other jurisdictions and was placed under enhanced follow-up.

Against this backdrop, the comprehensive criminalization of money transfer mule activities under the amended Act and the introduction of the fictitious-name account framework, which has certain characteristics of an undercover investigative technique, may demonstrate Japan’s ability to effectively address emerging money laundering risks and demonstrate compliance with international standards. However, the FATF evaluation will also assess the effectiveness of Japan’s law enforcement framework.

Given that Japan is scheduled to submit its technical compliance (TC) questionnaire in autumn 2027 as the basis for the on-site assessment, which is scheduled to take place in summer 2028, Japan’s compliance with the applicable laws and regulations and the practical implementation of those requirements are expected to be subject to close scrutiny. In particular, given that Japan’s fourth-round mutual evaluation found that it did not meet the required level of effectiveness in areas including the supervision and preventive measures applicable to financial institutions and other relevant businesses and the investigation, prosecution, and sanctioning of money laundering offenses, the relevant authorities are expected to intensify their engagement with financial institutions and other businesses in connection with the latest amendments.

Financial institutions and other relevant businesses should therefore continue to closely monitor developments concerning the implementation of the amended Act and the measures expected to be taken in practice.

Reference Materials

• Act Partially Amending the Act on Prevention of Transfer of Criminal Proceeds (Act No. 34 of 2026): Overview, Outline, Full Text, and Comparison Table (National Police Agency) National Police Agency – Act Partially Amending the Act on Prevention of Transfer of Criminal Proceeds
• Amendments to the Act on Prevention of Transfer of Criminal Proceeds in 2026 (Implementation Information) (National Police Agency) National Police Agency – 2026 Amendments to the Act on Prevention of Transfer of Criminal Proceeds
• Act Partially Amending the Act on Prevention of Transfer of Criminal Proceeds (Overview) (June 2026, National Police Agency)
• Report on Measures to Combat Money Laundering through the Abuse of Financial Services (December 25, 2025, National Police Agency/JAFIC)
• Notice on the Implementation of Part of the Act Partially Amending the Act on Prevention of Transfer of Criminal Proceeds (June 10, 2026, National Police Agency)
• FATF Fifth-Round Mutual Evaluation of Japan: An Introduction (Ministry of Finance) Ministry of Finance – FATF Fifth-Round Mutual Evaluation of Japan
• FATF Fifth-Round Mutual Evaluation of Japan: IO1 (Understanding and Coordination of ML/TF Risks) (Ministry of Finance)