JAPAN Law and Practice Contributed by: Ken Kawai, Shunsuke Aoki, Takeshi Nagase and Keisuke Hatano, Anderson Mori & Tomotsune
3.3 Issues Relating to Best Execution of Customer Trades Currently, there are no specific rules and no guidance applicable to robo-advisers in connection with best execution of customer trades. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities There is no significant business or regulatory differ - ence in online lending based on whether the borrower is an individual or a corporation. With the exception of commercial banks and certain banks incorporated for specific purposes, engaging in the loan business requires registration under the Money Lending Business Act (MLBA). Such business - es are then subject to the MLBA. Under the MLBA, a loan provider must prepare a written contract and certain explanatory documents and receipts. Further, the interest rate of a loan is subject to: • the Interest Rate Restriction Act; and • the Act Regulating the Receipt of Contributions, the Receipt of Deposits, and Interest Rates. Loan interest rate per annum must not exceed 20% for loans with a principal amount of less than JPY100,000, 18% for loans with a principal amount of between JPY100,000 and JPY999,999, or 15% for loans with a principal amount of JPY1 million or more. These regulations apply to loans to corporate borrow - In Japan, loan providers do not engage in underwrit - ing for non-professional investors. If a non-bank loan provider sells its loan receivables, its assignee would also be subject to the MLBA regulations. This regu - latory restriction makes it difficult to implement the underwriting of loan receivables for non-professional investors. Selling loan receivables to professional, institutional investors who can comply with the MLBA may be a ers as well as individual borrowers. 4.2 Underwriting Processes
(the so-called “Travel Rule”). However, transfers to a CAESP or an EPI-TSP in countries that do not yet have any Travel Rule legislation are not subject to the rule. In addition, when a CAESP or an EPI-TSP trans - fers digital assets to an unhosted wallet at the request of a customer, it is not subject to the Travel Rule. Nev - ertheless, even for transactions that are not subject to Travel Rules, information on the counterparty (such as name, blockchain address, and the like) must be obtained and recorded. 2.15 Financial Action Task Force (FATF) Standards Japan’s AML and sanctions regulations generally adhere to the standards set by the Financial Action Task Force (FATF). The APTCP serves as the primary AML legislation, requiring financial institutions and certain designated businesses to conduct customer due diligence (CDD), report suspicious transactions to the authorities, and implement internal compliance measures. 2.16 Reverse Solicitation Under Japanese law, there is no equivalent concept of reverse solicitation. In other words, Japanese financial regulatory law would essentially apply when a foreign entity provides financial services to Japanese residents, even if the foreign entity does not actively solicit Japanese resi - dents itself. 3. Robo-Advisers 3.1 Requirement for Different Business Models Japanese financial laws do not require different busi - ness models for different asset classes, per se. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Legacy players are proactively utilising robo-advisers. Having said that, unlike in the USA, the Japanese robo-adviser market is relatively small and a couple of independent robo-advisory companies are deemed market leaders.
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