Notification Required for Electronic Payment Methods and Digital Assets Transactions

In an effort to combat money laundering and terrorist financing, businesses involved in electronic payment methods and digital assets transactions are now required to notify the recipient of the customer’s identification and other relevant information.

Confirmation System Essential

To ensure proper confirmation at the time of transactions, business operators must establish a system that includes:

• Education and training for employees
• Maintenance of rules and regulations

This confirmation system is crucial in preventing illegal activities such as money laundering and terrorist financing.

AML Compliance Requirements Vary by Institution Type

In Japan, different types of institutions have varying Anti-Money Laundering (AML) compliance requirements. For example:

• Financial institutions such as banks and insurance companies are subject to stricter confirmation procedures at the time of transactions
• Certain professionals such as attorneys and judicial scriveners are exempt from some notification requirements

Government Authorities Oversee Compliance

The following government authorities oversee AML compliance in Japan:

• The Financial Services Agency (oversees banks, securities companies, and other financial institutions)
• The Minister of Economy, Trade, and Industry (supervises financial lease companies and credit card companies)
• The Casino Management Commission (regulates casino operators)

Suspicious Activity Reporting Requirements

Business operators must report suspicious activity to the competent supervisory agency if they suspect that:

• Property received in transactions is proceeds from crime
• A customer is suspected of concealing the proceeds from crime

Factors That Trigger Reporting Suspicious Activity

The following factors trigger the requirement to report suspicious activity:

• Transactions with new customers who have not conducted business with the operator previously
• Transactions with existing customers whose behavior is inconsistent with normal patterns
• High-risk transactions that require additional investigation

Confidentiality Requirements

Specified business operators are prohibited from disclosing their intention to notify or having notified suspicious transactions to customers or other related parties involved in the transactions. Failure to comply with this confidentiality obligation can result in:

• Administrative sanctions
• Criminal penalties

The public official receiving the notification is also subject to a confidentiality obligation under the National Public Service Law, and any violation of this obligation is punishable by criminal penalties.

Penalties for Violations

Violations of AML compliance requirements can result in severe penalties, including:

• Corrective orders
• Criminal charges