Funds transfer companies have a "obligation to notify regarding foreign exchange transactions."
This is one of the points that the authorities check in the application procedure for registering a funds transfer business related to foreign exchange transactions.
This time, we will explain this "obligation to notify regarding foreign exchange transactions".
Notification based on the Act on Prevention of Transfer of Criminal Proceeds
Japan has a law called the Act on Prevention of Transfer of Criminal Proceeds.
This law defines businesses in specific industries as "specified businesses" and requires them to take measures against money laundering, etc.
Funds transfer companies are one of the "specified businesses" and are therefore subject to this law.
This law (and its enforcement regulations) stipulates that when specified business operators entrust foreign exchange transactions to other exchange business operators (including those located in foreign countries), they must notify those exchange business operators of prescribed matters. I think it is necessary.
The prescribed information is the identification information of the "customer" and "recipient" and the bank account (or transaction reference number if a deposit or savings account is not used).
For individuals, personal identification information includes name, residence, and date of birth. If it is a corporation, this is the name and the location of the head office or principal office.
Previously, the recipient's information (identifying information, bank account, etc.) was excluded, but the enforcement regulations of this law have been revised, and from June 2023, 6, the recipient's information (identifying information, bank account, etc.) has been excluded. and bank accounts, etc.).
Furthermore, this provision does not only apply to cases in which a money transfer service provider initiates foreign exchange transactions. This also applies to cases where a money transfer business operator that has been entrusted by another domestic exchange business operator sub-entrusts foreign exchange transactions to a foreign exchange business operator, or where a money transfer business operator that has been entrusted by a foreign exchange business operator sub-entrusts foreign exchange transactions to another domestic exchange business operator.
Reference information
Act on Prevention of Transfer of Criminal Proceeds
(Obligation to notify regarding foreign exchange transactions) Article 10 Specified business operators shall conduct exchange transactions (by issuing checks or other methods specified by Cabinet Order) related to payments made with customers from Japan to foreign countries (excluding countries or regions specified by Cabinet Order; the same shall apply hereinafter in this Article). ), and when entrusting the payment to another specified business operator or foreign exchange business operator (excluding those located in the country or region specified by the relevant Cabinet Order; the same shall apply hereinafter in this article). , the customer shall be notified of personal identification information and other matters specified by ordinance of the competent ministry.
2. If a Specified Business Operator receives a notice pursuant to the preceding paragraph or this paragraph from another Specified Business Operator and is entrusted or re-entrusted with making a payment from Japan to a foreign country, the Specified Business Operator shall transfer said payment to the other Specified Business Operator or When subcontracting to a foreign exchange business operator, the matters related to the notification must be notified.
3 Specified business operators shall entrust or re-contract payments from a foreign country to Japan or payments from a foreign country to another foreign country upon receiving a notification from a foreign exchange business operator pursuant to the provisions of foreign laws and regulations that correspond to the provisions of this article. If the payment is to be re-entrusted to another specified business operator or a foreign exchange transaction business operator in the case of a contract, the payment must be done after notifying the relevant matters (limited to matters specified by the ordinance of the competent ministry). No.
4. If a Specified Business Operator receives a notice from another Specified Business Operator pursuant to the provisions of the preceding paragraph or this paragraph and receives a reconsignment for payment from a foreign country to Japan or from a foreign country to another foreign country, the specified business operator shall When re-entrusting payments to another specified business operator or a foreign exchange business operator, the payment must be made by notifying the relevant matters (limited to matters specified by ordinance of the competent ministry).
Regulations for Enforcement of the Act on Prevention of Transfer of Criminal Proceeds
(Notification matters related to foreign exchange transactions, etc.)
Article 31 The matters specified by ordinances of the competent ministries prescribed in Article XNUMX, Paragraph XNUMX of the Act shall be the matters specified in each of the following items according to the categories listed in the respective items.
(1) Customer: The matters specified in the following A or B, respectively, according to the category listed in that A or B.
(a) A natural person or an association or foundation without legal personality (excluding those that are found to have a designated representative or administrator based on the results of confirmation at the time of transaction and other circumstances): Matters listed
(1) Name
(2) Residence or the matters listed in Article 20, Paragraph 1, Item 17, or customer identification number (symbol number that is sufficient to identify the customer and is managed by a specified business operator that conducts exchange transactions related to payment with the customer) The same applies in (2).
(3) Depending on the category listed in (i) or (ii) below, the matters specified in (i) or (ii), respectively (i) If a deposit or savings account is used, the account number of the account (ii) Deposit or If a savings account is not used: Transaction reference number (a symbol number that is sufficient for a specified business entity that conducts exchange transactions related to payments with customers to identify the transaction)
(b) Corporations (including associations or foundations without legal personality (limited to those deemed to have a designated representative or administrator based on the results of confirmation at the time of transaction and other circumstances)) The following matters:
(1) Name
(2) Location of head office or principal office or customer identification number
(3) Matters listed in (a) (3)
(ii) The customer's payment partner: The following matters:
A name or name
(b) Matters specified in the following (1) or (2), respectively, according to the category listed in the said (1) or (2).
(1) If using a deposit or savings account, the account number of the account
(2) When a deposit or savings account is not used: Transaction reference number (a symbol number that is sufficient for a foreign exchange transaction business operator who conducts a payment-related exchange transaction with the other party to identify the transaction)
2. The matters specified by the ordinances of the competent ministries prescribed in Article 10, paragraphs 3 and 4 of the Act shall be equivalent to the matters prescribed in the preceding paragraph.
What is a specified business operator under the Act on Prevention of Transfer of Criminal Proceeds?
Article 2, paragraph 2 of the Act on Prevention of Transfer of Criminal Proceeds (Criminal Proceeds Act) lists financial institutions (banks, credit unions, insurance companies, financial instruments business operators, money transfer businesses, money lenders, etc.), financial leasing companies, credit card companies, real estate transaction businesses, etc. as specified business operators.
What are the notification obligations for a specified business operator when entrusting foreign exchange transactions?
Pursuant to Article 10 of the Criminal Proceeds Act, when a specified business operator entrusts foreign exchange transactions related to a customer's payment to a foreign country to another specified business operator or a foreign exchange dealer located in a foreign country, it is obligated to notify the customer and recipient of their personal identification information (such as name, address, date of birth, etc.) and bank account information.
Are there any penalties for violating the notification obligation?
Under the Criminal Proceeds Act, if you violate the notification obligation, you may be penalized. The specific penalties vary depending on the content and severity of the violation.
What is a suspicious transaction report?
If a specified business operator determines that a transaction is suspected of money laundering or terrorist financing, it is obligated to report the details of the transaction to the authorities pursuant to Article 8 of the Criminal Proceeds Act.
What is Time of Transaction Verification?
Verification at the time of transaction refers to a specified business operator verifying a customer's identity when conducting a transaction, and is stipulated in Article 4 of the Criminal Proceeds Act.
How long are verification records kept?
Pursuant to Articles 6 and 7 of the Criminal Proceeds Act, specified business operators are obligated to retain records of transaction verification and transaction records, etc. for seven years.
What are the changes to the Criminal Proceeds Transfer Prevention Act in 2022?
The 2022 amendment to the Criminal Proceeds Act includes strengthening the internal management systems of specified business operators and tightening verification at the time of transactions.
What internal control systems must specified businesses establish?
In order to properly conduct verification at the time of transactions and report suspicious transactions, specified business operators are required to establish internal control systems, such as formulating internal rules, educating and training employees, and building risk management systems.
What are the specific details of the notification obligation under Article 10 of the Criminal Proceeds Act?
Article 10 of the Criminal Proceeds Act requires that when a specified business operator entrusts foreign exchange transactions to another specified business operator or a foreign exchange dealer located in a foreign country, the specified business operator must notify the customer and recipient of their personal identification details, bank account numbers, transaction reference numbers, etc.
Where can I find out the rules and regulations that specified businesses must comply with?
The rules and regulations that specified business operators must comply with are detailed in the Act on Prevention of Transfer of Criminal Proceeds and its Enforcement Regulations.
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