Notification Requirements for Electronic Payment Methods or Digital Assets in Japan

As electronic payment methods and digital assets continue to grow in popularity, businesses operating in Japan must be aware of the necessary notifications required when transferring these types of assets.

System Establishment

To ensure accurate confirmation during transactions, businesses are advised to establish a system that includes:

• Education and training
• Maintenance of rules and regulations
• Proper identification of suspicious activity and reporting accordingly

This system will enable operators to properly identify suspicious activity and report it accordingly.

Notification Requirements

Under Japan’s Anti-Money Laundering (AML) rules, specified business operators (SBOs) must notify the competent supervisory agency promptly when they suspect that property received in transactions is proceeds from crime or if a customer is suspected of concealing such proceeds. The notification process varies depending on:

• Type of transaction
• Category of SBO

For new customers with whom no previous transactions have been conducted, SBOs must:

• Compare the transaction with normal business practices
• Ensure consistency with information obtained during confirmation at the time of the transaction

For existing customers, SBOs must:

• Examine past confirmation and transaction records
• Update information on confirmation records and other relevant details

High-risk transactions require additional measures, including:

• Investigations to confirm customer information
• Confirmation by a general manager or equivalent regarding any suspicious activity

Confidentiality Requirements

The reporting of suspicious activity is subject to confidentiality requirements. SBOs are prohibited from divulging their intention to notify or have notified suspicious transactions to customers or other related parties involved in the transactions. Violations of this confidentiality obligation can result in:

• Administrative sanctions
• Criminal penalties

Public officials who receive notifications of suspicious activity are also subject to an obligation of confidentiality under Japan’s National Public Service Law, with violations punishable by criminal penalties.

Conclusion

In conclusion, businesses operating in Japan must be aware of the necessary notifications required when transferring electronic payment methods or digital assets. Establishing a system for proper confirmation and reporting of suspicious activity is crucial for compliance with AML regulations, while maintaining confidentiality requirements is essential to protect the integrity of the process.