In response to repeated international calls, the government is preparing legislation to restrict the financial transactions of people suspected of involvement in terrorist activities and to effectively freeze their assets.

Japan must not shy away from efforts to eradicate terrorism such as shutting down the flow of money that funds the activities of terror groups. But the government should remove any ambiguity from the definition of “terrorists” in order to dispel concerns about the possible risk of discretionary labeling by investigative authorities.

The Abe administration is expected to submit a relevant bill to the current Diet session by the end of November. Legislation reportedly under consideration will mainly target people and organizations in Japan designated as terrorists on the basis of United Nations Security Council resolutions.

Money transfers to people or groups on such a list will require permission from relevant authorities, thereby effectively freezing their financial assets. Also as part of the efforts against terrorist financing, the government has its eyes set on another bill aimed at requiring financial institutions to tighten “due diligence” checks on customers.

In June, the Financial Action Task Force, an intergovernmental organization aimed at combating money laundering and terrorist financing, urged Japan to quickly address deficiencies in halting the funding of terrorist groups, citing its “incomplete criminalization” of terrorist financing and its “incomplete mechanism” for freezing terrorist assets.

The FATF has specifically called on Japan to tighten controls on domestic funds that could be made available to terrorist groups and individuals, and on support for terrorist activities provided by their collaborators.

Also as a means to combat terrorist financing, the FATF has been urging Japan to enact a law that would introduce the crime of conspiracy. Japan signed the United Nations Convention Against Transnational Organized Crime adopted in 2000, but has not since ratified the treaty. Enactment of such a law, which enables authorities to penalize people for taking part in plotting a serious crime — even if the crime has not been carried out and no concrete preparations have been made to commit the act — is a prerequisite for the nation to join the convention.

Still, strong opposition remains against such legislation because of concerns it could increase investigative authorities’ surveillance of people at large. It was speculated earlier that the government, after three unsuccessful attempts in the past, might submit this bill again to the current Diet session. It is said to have abandoned the attempt out of concern that it could alienate public opinion. On the other hand, legislation aimed at halting the flow of money to finance terrorist activities will likely get broad public support.

One question is how the bill will define terrorists or their collaborators. The state secrets law, enacted last year and set to be implemented in December, defines terrorism as “activities intended to kill or injure people or destroy important facilities or any other objects for the purpose of forcing a political or any other principle or belief upon a State or other persons or causing fear or terror in society based on such principle or opinion.” This is such a wide definition that concern lingers that anti-government demonstrations by civic groups could conceivably be targeted.

If the same definition is to be used in the planned law against terrorist financing, the risk of discretionary labeling of terrorists by investigative authorities would not be ruled out.

What set of criteria will be used by the government to designate targets of the planned law, and whether the process can be appropriately monitored, need to be closely watched.

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