Source: 2000
Released by the Bureau for International Narcotics and Law Enforcement Affairs
Although Japan is not a major producer of drugs, it is one of the largest methamphetamine markets in Asia; an estimated 600,000 addicts and 2.18 million casual users nationwide consumed 10-20 metric tons of imported methamphetamines in 2000. Most of the methamphetamines smuggled into Japan is believed to have been refined in the People's Republic of China (PRC), Taiwan, Hong Kong, and the Philippines, although there have been methamphetamine seizures linked to Burma and to North Korea. Japanese law-enforcement officials have made record methamphetamine seizures in the last two years. Through November 2000, almost 713 kilograms of methamphetamines were seized, which is the second largest volume Japanese officials have seized in any given calendar year. Single record seizures of MDMA ("ecstasy") and LSD were also made in 2000. While not a significant route for drug trafficking, Japan is regarded as a major money-laundering center, and narcotics-related money laundering is believed to be more serious in Japan than is indicated by arrests and prosecutions. Japan has been a party to the 1988 UN Drug Convention since 1992.
Japan is not, and is unlikely to become, a significant producer of narcotics or precursor chemicals used in the production of illicit narcotics. However, it is believed to have one of the largest methamphetamine markets in Asia. Methamphetamine continued to be Japan's most widely abused drug in 2000. Approximately 90 percent of all drug arrests in 2000 involved this substance, and authorities estimate there are 600,000 addicts and 2.18 million casual users nationwide. These users consumed 10-20 metric tons of imported methamphetamines in 2000.
Narcotics trafficking remains a source of income for Japanese organized crime, and Japanese law-enforcement officials report that the participation of the illegal immigrant population in drug-trafficking activity continued to increase. However, Japan is not an important transshipment point for drug traffickers. According to the Drug Enforcement Administration's (DEA) Tokyo Office, there were no cases in 2000 of transshipment of Southeast Asian heroin through Japan destined for the United States.
While not an important route for drug traffickers, Japan is a major money-laundering center. A detailed discussion of money laundering is in the Money Laundering and Financial Crimes section of this report.
Policy Initiatives. In August 2000 the Japanese Diet enacted legislation that allows law-enforcement authorities to use wiretaps in certain criminal investigations, including suspected drug offenses. Wiretaps can only be used, however, if law-enforcement officials show that all other investigative techniques have been ineffective.
Accomplishments. In 2000 the U.S. and Japan held another round of negotiations on a Mutual Legal Assistance Treaty (MLAT) and exchanged proposed revisions to a draft treaty text. The two sides hope to conclude the treaty negotiations in 2001. The MLAT is expected to expedite and strengthen law-enforcement cooperation.
The Japanese government hosted its first large-scale international narcotics meeting in Tokyo in January 2000, drawing approximately 200 officials from 30 countries who attended three separate conferences, a segment of which was coordinated with the UN Drug Control Program (UNDCP). The conference included a training seminar organized by five Japanese government ministries/law-enforcement agencies. Topics of the three meetings were Amphetamine-Type Stimulants in East Asia, Asian Operational DrugEnforcement, and World Customs Organization--Asia Pacific Region Drug Enforcement. The training seminar focused on maritime drug-enforcement techniques in Asia. Japan continued to sponsor several annual international drug-enforcement and drug-prevention programs in 2000. As an active member of the UNDCP's Major Donors group, Japan provided important financial support to many UNDCP programs. Japan also participated in all major conferences conducted in 2000 throughout the world that concerned narcotics trafficking.
Law Enforcement Efforts. Although less than the record amount seized in 1999, the volume of methamphetamines seized by Japanese authorities through November 2000 was the second largest amount seized by Japanese officials in a calendar year. Narcotics enforcement agents also made record single seizures of LSD (40,000 tablets) and MDMA (50,000 dosage units) in 2000.
Police antinarcotics efforts tend to focus on Japanese organized crime groups, which are the main smugglers and distributors of drugs. However, police and prosecutors have been hesitant to pursue cases in which the likelihood of a conviction is uncertain. In addition to smuggling and distribution activities, law-enforcement officials are starting to pay increased attention to drug-related financial crimes. The Financial Services Agency received over 4,000 reports of suspicious transactions in 2000.
In 1998 the National Police Agency (NPA) seized a total of about U.S. $7.23 million in drug proceeds in 82 investigations under the Asset Seizure Law, which took effect in 1992. No figures have been made available for total seizures in 1999 or the first eleven months of 2000. However, the NPA reported having seized about U.S. $1.4 million in drug proceeds in a series of cases in 1999 involving illegal immigrant traffickers.
Corruption. Japan has no known drug-related corruption.
Asset Forfeiture. Japan has established systems for identifying, tracing, freezing, seizing, and forfeiting narcotics-related assets. The Japanese seizure statute allows the government to seize: 1) those funds that can be directly linked to a specific drug investigation/violation (i.e. illicit proceeds); 2) any property derived from illicit proceeds; 3) any property obtained in reward for committing an offense; and 4) any property ruled to be a "fruit of the crime." In the event illicit funds have been commingled with legitimate funds, Japanese law states that only an amount of the legitimate property equivalent to the amount of illicit property may be confiscated. This portion of the law, however, remains to be tested. A legitimate business cannot be seized if it is used to launder money or other criminal proceeds. The Central Government Treasury receives the proceeds of narcotics-related asset seizures and forfeitures.
Although the Japanese government has the authority to forfeit seized assets, the law only allows for criminal, not civil, forfeiture. The severe burden Japanese law places on law-enforcement authorities to prove a direct connection to criminal activity makes it difficult to enforce the asset-seizure law and may allow traffickers to shield assets. No new legislation was introduced in 2000 to amend Japanese laws regarding seizure and forfeiture of assets of narcotics traffickers. Japan has not enacted laws that allow for sharing of seized narcotics assets with other countries.
Agreements and Treaties. Japan is a party to the 1988 UN Drug Convention. A U.S.-Japan Extradition Treaty is currently in force, as is a Customs Mutual Assistance Agreement. The U.S. and Japan are engaged in negotiations on a Mutual Legal Assistance Treaty. In February 2000 Japan and Vietnam signed a counternarcotics agreement that provides for information sharing and Japanese training for Vietnamese counternarcotics officers. In December 2000 Japan signed the UN Convention Against Transnational Organized Crime.
Cultivation/Production. Although Japan does not cultivate or manufacture controlled substances, it is a major producer of 60 types of precursor chemicals that have legitimate industrial uses. For example, Japan is one of only a handful of countries that produce ephedrine, a chemical used in antihistamines, but which is also an essential ingredient in methamphetamine production. Ephedrine is strictly controlled under Japanese law, and the penalties for importation are almost as severe as those for importation of methamphetamines. Japan is a member of the Chemical Action Task Force (CATF) and recently increased the number of chemicals it controls from the 22 identified by the CATF to 28. The DEA Country Attache in Japan also conscientiously monitors end users of precursors.
Drug Flow/Transit. Almost all drugs illicitly trafficked in Japan are smuggled from overseas. According to the National Police Agency, the PRC, Taiwan, Hong Kong, the Philippines, North Korea, and Burma are principal sources.
Domestic Programs/Demand Reduction. Domestic programs focus primarily on interdiction. Drug treatment programs are small and are generally run by private organizations. The Japanese government provides narcotics-related counseling designed to prevent drug use and supports the rehabilitation of addicts at prefectural Health Centers and Mental Health and Welfare Centers at the prefecture level. Prefecture governments also employ part-time narcotics counselors. The Japanese government continued to support a number of drug awareness campaigns, including the five-year campaign drawn up in 1998 by the Headquarters for the Promotion of Measures to Prevent Drug Abuse, an office headed by the Prime Minister. The five-year program is designed to inform the public about the growing use of stimulants in Japan, especially among junior and senior high-school students. As part of the program, the Ministry of Health and Welfare, along with prefectural governments and a variety of private organizations, continued to administer national publicity campaigns using ads that run on television, radio, and electronic scoreboards used at major sporting events. The plan also promotes drug education programs at the community level, including one that organizes talks between students and former drug addicts and another that provides posters with antidrug messages that targets students attending high-school baseball games.
Policy Initiatives. U.S. goals and objectives include progression toward concluding a Mutual Legal Assistance Treaty; strengthening enforcement cooperation, including participation in controlled deliveries; encouraging more demand-reduction programs; encouraging effective use of new anticrime legislation; and encouraging action by government agencies responsible for financial transaction oversight.
Bilateral Cooperation. The U.S.-Japan Common Agenda for Global Cooperation, established in 1993, includes a narcotics working group where the U.S. and Japan have worked together to reduce supply and demand for narcotics in third countries. Under the Common Agenda, both countries also contributed to UNDCP programs. U.S. and Japanese law-enforcement officials continued to cooperate in 2000 to investigate allegations of money laundering and to monitor the use of precursor and essential chemicals.
The Road Ahead. U.S. law-enforcement agencies will continue to work closely with their Japanese counterparts on drug and crime investigations, including money laundering. The U.S. and Japan will continue to work toward concluding a Mutual Legal Assistance Treaty and to explore new, cooperative counternarcotics initiatives.
Japan is an important world financial center and is believed to be a major money laundering center. The principal sources of laundered funds are drug trafficking and financial crimes (illicit gambling, extortion, abuse of legitimate corporate activities, and all types of property related crimes) as well as the proceeds from violent crimes, mostly linked to Japan's criminal organizations, e.g., the boryokudan. The Japanese National Policy Agency estimates that the boryokudan's illegal activities generate annually several billion dollars in proceeds. US law enforcement reports that drug-related money laundering investigations initiated in the US periodically show a link between drug-related money laundering activities in the U.S and bank accounts in Japan.
Prior to 1999, Japanese law only criminalized narcotics-related money laundering. The Anti-Drug Special Law, enacted in 1991, criminalized drug-related money laundering, mandated suspicious transaction reports for the illicit proceeds of drug offenses, and authorized controlled drug deliveries. This legislation also created a system to confiscate illegal profits gained through drug crimes. The seizure provisions apply to tangible and intangible assets, direct illegal profit, substitute assets, and criminally derived property that has been commingled with legitimate assets. The limited scope of the law and the burden required of law enforcement to prove a direct link between money and assets to specific drug activity severely limited the law's effectiveness. As a result, Japanese police and prosecutors have undertaken few investigations and prosecutions into suspected money laundering.
Pursuant to the 1999 Anti-Organized Crime Law, which came into effect in February 2000, Japan expanded its money laundering law beyond drug trafficking to include money-laundering predicates such as murder, aggravated assault, extortion, theft, fraud, and kidnapping. The new law also extended the confiscation laws to include the additional money laundering predicate offenses and to include value-based forfeitures, and authorized electronic surveillance of organized crime members.
To facilitate exchange of information related to suspected money laundering activity, the law established the Japan Financial Intelligence Office (JAFIO) as Japan's financial intelligence unit. Financial institutions in Japan report suspicious transactions to the JAFIO as instances of suspicious transactions are discovered. The number of suspicious transaction reports continued to increase during the first eleven months of 2000, rising from 900 in 1999 to over 4,000 in 2000.
Japanese banks and financial institutions are required by national laws to record and report the identity of customers engaged in large currency transactions. There are no secrecy laws that prevent disclosure of client and ownership information to bank supervisors and law enforcement authorities. Under the 1998 Foreign Exchange and Foreign Trade Control Law, banks and other financial institutions must report transfers abroad of five million yen (approximately US $44,579) or more. Domestic laws also require banks and financial institutions to maintain records for an adequate period of time should they be needed to reconstruct significant transactions. This requirement is not specifically narcotics-related.
Japanese financial institutions have cooperated, when requested, with law enforcement agencies, including US and other foreign government agencies investigating financial crimes related to narcotics. Japan has not adopted "due diligence" or "banker negligence" laws that make individual bankers responsible if their institutions launder money, but there are administrative guidelines in existence that require due diligence. The law does, however, protect bankers and other financial institution employees who cooperate with law enforcement entities.
The 1998 Foreign Exchange and Foreign Trade Control Law required travelers entering and departing Japan to report physically transported currency and monetary instruments exceeding one million yen (approximately US $8,916) or its equivalent in any other foreign currency to customs authorities. The reporting requirement is virtually ignored by travelers, however, because there is no meaningful penalty (i.e. seizure of currency) for failure to report.
Japan is a party to the 1988 UN Convention and has adopted formal articles of ratification. In December 2000 Japan signed the United Nations Convention against Transnational Organized Crime. Japan is a member of and also chaired the Financial Action Task Force (FATF) from June 1998 to June 1999. The JAFIO joined the Egmont Group of FIUs in 2000. Japan is also a member of the Asia/Pacific Group against Money Laundering (APG). Japan has endorsed the September 1997 Basle committee's "Core Principles for Effective Banking Supervision."
Japan has not enacted laws that allow for sharing of seized narcotics assets with other countries. However, the Japanese Government cooperates with efforts by the US and other countries to trace and seize assets, and makes use of tips on the flow of drug-derived assets from foreign law enforcement efforts to trace funds and seize bank accounts.
The government of Japan should stringently enforce the Anti-Organized Crime Law, which will enhance Japan's ability to combat a wide range of money laundering activities. The Government of Japan has many legal tools and agencies in place to successfully detect, investigate and combat money laundering. Japan could strengthen its anti-money laundering regime by enacting penalties for non-compliance with the Foreign Exchange and Foreign Trade Law, adopting measures to share seized assets with foreign governments, and strongly enforcing banker "due diligence" provisions.