June 27, 2014 / 5:22 PM / 3 years ago

Japan must step up fight on money laundering - global watchdog

TOKYO, June 28 (Reuters) - Japan has not done enough to combat money laundering, an international watchdog said, urging the government to adopt measures including legislation to criminalise what it called "terrorist financing".

The Paris-based Financial Action Task Force (FATF) referred to its 2008 report on Japan, which highlighted deficiencies such as a lack of internal controls among financial institutions to prevent and detect illicit money transfers.

"The FATF is concerned by Japan's continued failure to remedy the numerous and serious deficiencies identified in its third mutual evaluation report adopted in October 2008 despite Japan's high-level political commitment," it said in a statement.

The FATF, an inter-governmental body established in 1989 and backed by 34 countries and jurisdictions including the United States, Germany and France, also said one of Japan's biggest deficiencies was an "incomplete criminalisation of terrorist financing."

While the agency did not mention any specific actions or add Japan to its blacklist of high-risk and non-cooperative jurisdictions, the move may be an embarrassment for the country's regulators and financial sector in the wake of a mob loan scandal last year involving Mizuho Financial Group .

The lender was embroiled in a scandal over loans that were extended to organised crime networks through a consumer finance affiliate.

The FATF's website states its objectives as being to "set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system." (Reporting by Ritsuko Ando; Editing by David Holmes)

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