[Amendment to the Enforcement Regulations of the Criminal Proceeds Act] Regarding identity verification methods

The revised Enforcement Regulations of the Act on Counterfeit Transactions, which will come into effect in April 2027, will significantly revise identity verification methods, particularly in non-face-to-face transactions.
The previously widely used methods of verification such as sending images and copies of documents will be abolished in principle, and more rigorous methods using IC chips and the Public Personal Identification Service (JPKI) will be recommended.

In addition, the revised Act on the Use of Numbers (effective June 2025, 6) will also introduce a new system for identity verification using "card-substitute electronic records" that can be installed on smartphones, strengthening the connection with the digitalization of administrative procedures.

This article provides an overview of the amendments and their practical impact.

　What is the Act on Prevention of Transfer of Criminal Proceeds?

The Act on Prevention of Transfer of Criminal Proceeds aims to prevent money laundering and terrorist financing, and to ensure the safety of people's lives and the sound development of the economy.
It imposes obligations on specified businesses, such as financial institutions and real estate agents, to verify transactions, create and keep records, and report suspicious transactions.
The law has been revised several times to respond to international demands and the increasing sophistication of criminal methods.

　Main changes regarding identity verification methods

Tighter non-face-to-face identity verification (effective April 9, 4)

Main points

The following changes are planned for non-face-to-face identity verification methods:

(1) Abolition of identity verification method using image data

The current method of verifying identity by photographing both sides and the thickness of the My Number card and sending the images through an app or other means provided by a specified business operator will be abolished.
This measure is in response to the risk of impersonation using forged documents.

(2) Abolition of the method of submitting copies of identification documents in principle

The practice of sending copies of identification documents will also be abolished in principle.
However, some methods that fall under Article 6, Paragraph 1, Item 1, Nu of the Regulations will be permitted to continue only for transactions that are evaluated as having low risk, such as sending the item as registered mail or other mail that does not require forwarding.

(3) Limitations on documents that can be used for verification by sending original documents

The method of sending original identification documents is limited to documents that have been protected against forgery.
Examples include a seal registration certificate, a copy of the family register attachment, a copy of the resident registration card, and a certificate of details recorded on the resident registration card.

(4) Exceptional Treatment for Non-Resident Foreign Nationals

For non-face-to-face transactions with non-resident foreigners, etc., methods equivalent to the previous verification methods (such as sending copies of identification documents and supplementary documents, sending transaction-related documents by non-forwardable mail, etc.) will continue to be available.
This was done to ensure that realistic means of verification would be available even after the amendment.

(5) Review of corporate identity verification methods

For corporate customers, the method of verifying identity by submitting copies of identification documents will, in principle, be abolished and the originals will have to be sent.
For transactions with foreign entities, it will still be permissible to send copies of identity documents, which is intended to ensure an effective means of verification without face-to-face contact.

Background and purpose of the amendment

The purpose of this amendment is to reduce the risk of identity theft through the use of forged identification documents, etc., by consolidating identity verification methods into low-risk methods, such as using My Number cards.
In order to ensure that effective verification methods remain available for non-face-to-face transactions even for customers who do not have identification documents with IC chips and non-resident foreigners, the traditional verification methods of sending documents by mail, etc. will be retained, while being limited to low-risk methods.

Reference:https://public-comment.e-gov.go.jp/pcm/download?seqNo=0000294589

Establishment of a new identity verification method using electromagnetic records instead of cards (effective June 7, 6)

Due to the amendment to the Act on the Use of Numbers, a new method of identity verification has been established that uses a "card-substitute electronic record" that has the same function as the My Number Card.
This method is a function that can be installed on smartphones, in which personal identifying information (such as name, address, date of birth, and photograph) is electronically managed and transmitted, and then specific businesses etc. receive and confirm this information to verify the identity of the person.

Main points

• Using components of card-substitute electromagnetic records (electronic certificates, etc.), personal identification information can be transmitted
• The information is sent via smartphone, etc., and the specified business operator verifies the identity of the customer using a special verification program.
• To send or receive information, you need to use a sending or checking program.

Background and purpose of the amendment

This amendment aims to improve convenience and streamline procedures by providing the option of identity verification using a smartphone in addition to the traditional My Number card, in line with the promotion of digitalization of administrative procedures.
In particular, the launch of the My Number Card function on smartphones will further expand the means of identity verification.

Reference:https://public-comment.e-gov.go.jp/pcm/download?seqNo=0000294579
related news:https://services.digital.go.jp/mynumbercard-iphone/news/10c42297159b33349de8e/

　Responding to the enforcement of revised laws

The enforcement of the revised Criminal Proceeds Act in April 2027 is expected to have an impact on identity verification practices.
Particularly in non-face-to-face transactions, there may be cases where methods that have been used up until now will no longer be usable, so we expect there will be an increasing number of situations where operations will need to be reviewed.

As a switch to new methods such as IC chip reading and JPKI is anticipated, it is important to begin sorting out what adjustments will be required to systems and business processes.
In addition, attention will be focused on technological developments, including the spread of identity verification using smartphones and the introduction of "electronic records instead of cards."

It would be advisable to strive to balance user convenience with security, while assessing the future direction of system operation and considering responses that are appropriate to your company's situation.