Notice to Outsourced Parties: Confidentiality and Information Requirements for Electronic Payment Methods and Digital Assets

Introduction

As part of Japan’s Anti-Money Laundering (AML) regulations, it is essential for businesses to notify outsourced parties of the customer’s identification and other relevant information when transferring electronic payment methods or digital assets.

System Establishment for Confirmation

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

• Education and training
• Maintenance of rules and regulations

This is crucial to prevent any potential money laundering activities.

Confidentiality Obligations and Information Requirements

When reporting suspicious activity, specified business operators are prohibited from disclosing to customers or related parties that they intend to notify or have notified suspicious transactions. This includes:

• Violation of this confidentiality obligation can result in corrective orders and criminal penalties.
• Public officials receiving the notification are also subject to confidentiality obligations under the National Public Service Law.

Reporting Suspicious Activity

Specified business operators must report suspicious activity promptly to the competent supervisory agency (e.g., Financial Services Agency) when they suspect that property received in transactions is proceeds from crime or when a customer is suspected of concealing such proceeds. The reporting process varies depending on the transaction category, including:

• New customers
• Existing customers
• High-risk transactions

Key Takeaways

• Notify outsourced parties of the customer’s identification and other relevant information for electronic payment methods and digital assets.
• Establish a system for confirmation at the time of transactions.
• Maintain confidentiality when reporting suspicious activity to avoid penalties.

By complying with these requirements, businesses can ensure compliance with Japan’s AML regulations and maintain a secure environment for transactions.