JAPAN Law and Practice Contributed by: Ken Kawai, Shunsuke Aoki, Takeshi Nagase and Keisuke Hatano, Anderson Mori & Tomotsune
2.14 Impact of AML and Sanctions Rules In Japan, AML rules are regulated by the APTCP. The APTCP requires “specified business opera - tors” to conduct KYC and the like. The term “specified business operators” refers to busi- ness operators like fintech companies (among others) that are subject to financial regulations. The APTCP is not directly applicable to unregu - lated fintech companies that do not fall within the definition of “specified business operators” . Accordingly, the AML policies (if any) of such unregulated fintech companies would only be those they have established on their own initia- tive. Travel Rule When a CAESP or EPI-TSP transfers digital assets to a customer of another CAESP or EPI- TSP (including any foreign CAESP or EPI-TSP) at the request of a customer, the transferring CAESP or EPI-TSP must notify the receiving CAESP or EPI-TSP of the identification information, includ - ing the name and blockchain address, pertain - ing to the sender and the receiver (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 transfers digital assets to an unhosted wallet at the request of a customer, it is not subject to the Travel Rule. Nevertheless, 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 Standards Japan’s AML and sanctions regulations gener - ally adhere to the standards set by the Financial Action Task Force (FATF).
The APTCP serves as the primary AML legisla - tion, requiring financial institutions and certain designated businesses to conduct customer due diligence (CDD), report suspicious transac - tions to the authorities, and implement internal compliance measures. 2.16 Reverse Solicitation Under Japanese law, there is no equivalent con - cept of reverse solicitation. In other words, Japanese financial regulatory law would essentially apply when a foreign enti - ty provides financial services to Japanese resi - dents, even if the foreign entity does not actively solicit Japanese residents itself. 3. Robo-Advisers 3.1 Requirement for Different Business Models Japanese financial laws do not require different business 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-adviso - ry companies are deemed market leaders. 3.3 Issues Relating to Best Execution of Customer Trades Currently, there are no specific rules and no guidance applicable to robo-advisers in con - nection with best execution of customer trades.
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