JAPAN Law and Practice Contributed by: Ken Kawai, Shunsuke Aoki, Takeshi Nagase and Keisuke Hatano, Anderson Mori & Tomotsune
2.3 Compensation Models There are no regulations specifically targeting fintech companies in connection with compensation mod - els. The compensation restrictions under traditional finance regulations are also applicable to fintech ser - vices. 2.4 Variations Between the Regulation of Fintech and Legacy Players There are no specific regulatory incentives applicable to fintech companies. Fintech companies are on equal The Japanese regulatory sandbox was introduced in June 2018 and can be used by both Japan residents and overseas companies. It enables companies to apply and receive approval for innovative and new projects and services that are not yet contemplated under current regulations without the need for amend - ment of existing regulations. Approved projects may not be carried out as a business but rather as a proof of concept or demonstration under certain conditions, including limitations on the number of participants and duration of operations. There are no limitations on the business sectors that can benefit from the sandbox. 2.6 Jurisdiction of Regulators footing with legacy players. 2.5 Regulatory Sandbox The main regulatory body for fintech businesses is the FSA, including the local finance bureaus to which it has delegated certain aspects of its authority. The Ministry of Economy, Trade and Industry (METI) has jurisdiction over credit cards and instalment pay - ments. The Ministry of Land, Infrastructure, Transport and Tourism has jurisdiction over some types of real estate fund businesses. The NPA, FSA and Ministry of Finance have co-jurisdiction over matters of AML/ CFT. The Personal Information Protection Committee is the prime regulator of personal information. How - ever, the FSA shares regulatory power over the pro - tection of personal information in the financial sector. 2.7 No-Action Letters The FSA’s “no-action letter” system grew out of a paper entitled “Regarding the Introduction of Prior Confirmation Procedures on the Application of Laws and Regulations by Administrative Agencies”, pursu - ant to Cabinet decision on 27 March 2001. It is stat -
ed in the paper that, “With respect to fields that may catalyse new industries and new products and ser - vices, including information technology and finance, in order to enhance the ability of private enterprises to anticipate whether a certain action would conflict with laws and regulations, administrative agencies will be arranged such that private-sector enterprises can inquire in advance as to the relationship between the action concerned and the provisions of certain laws and regulations. In addition, in order to ensure the fair - ness of administration and promote increased trans - parency, contents of the inquiries concerned and the administrative agencies’ responses will be made pub - lic”. To this end, the Cabinet established guidelines with regard to the above, stating that “...the responses of administrative agencies with jurisdiction to enforce certain laws and regulations in reply to inquiries by pri - vate enterprise, etc, to seek advance confirmation on whether proposed actions relating to the enterprise’s business are regulated, will be made public”. Based on this Cabinet decision, the FSA introduced a no-action letter system on 16 July 2001. This system is explained below. The laws and regulations that are the subject of the FSA no-action letter procedures are those laws (including subsidiary regulations) over which the FSA has jurisdiction. Inquiries regarding those laws and regulations should be made in accordance with the 27 March 2001 Cabinet Decision (entitled “Regarding the Introduction of Prior Confirmation Procedures on the Application of Laws and Regulations by Administra - tive Agencies”), to meet the aim of the Cabinet Deci - sion. The aim of the Cabinet Decision was to create a system under which (i) procedures are established to enable private enterprise, etc, to seek advance confirmation with the administrative agency having jurisdiction to enforce certain laws and regulations on whether proposed actions in connection with enter - prise’s business activities are regulated, (ii) the rel - evant administrative agency provides a response to the relevant enterprise and (iii) such response from the relevant administrative agency is made public. In this connection, inquiries are classified into the following categories:
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