JAPAN Trends and Developments Contributed by: Keiji Tonomura, Shu Sasaki, Kazuyuki Ohno and Otoki Shimizu, Nagashima Ohno & Tsunematsu
regulatory licences related to issuance, but also for licences related to intermediation. Regulatory Trends in Cross-Border Collection Agency Any person engaging in “exchange transactions” as a business in Japan is required to obtain a licence such as a banking business licence under the Banking Act of Japan, or register as a fund transfer business under the PSA. Although the Supreme Court has handed down a decision regarding the definition of “exchange transac- tions” , its scope remains unclear, which makes it difficult to definitively determine whether a particular service constitutes a regulated fund transfer service. In relation to collection agencies receiving pay - ments from payers on behalf of creditors, the Financial System Council’s “Working Group on Regulations for Payment Services Providers and One-Stop Financial Services Brokers” issued a report on 20 December 2019 (the “2019 Report” ) that made certain clarifications. The PSA and the Cabinet Office Order on Funds Transfer Service Providers stipulate that transactions in which certain collection agencies provide services where the creditor is an individual and which sat - isfy certain requirements constitute “exchange transactions” . However, it remains unclear whether a particular service of other collection agency services constitutes a regulated fund transfer service. The 2019 Report clarified that, if such collection agency services meet certain requirements, they may not necessarily be sub - ject to the regulations applicable to “exchange transactions” . However, concerns remain that cross-border collection agencies may be involved in illegal activities or may cause issues to arise from an AML/CFT perspective. In this regard, the Finan -
cial System Council’s “Working Group on Pay- ment Services System, etc” , issued the 2025 Report discussing the regulatory approach to these cross-border collection agencies. The 2025 Report, however, does not take the view that all cross-border collection agencies’ ser - vices should be regulated as “exchange trans- actions” services. Instead, it states that “cross- border collection agency services provided by a person who is involved in creating the underly- ing monetary claim” and “escrow services” pro - vided by platforms and others that fulfil certain requirements may not be immediately subject to the regulation. In addition, the 2025 Report also argued that “cross-border collection agency ser- vices provided by a person who is not involved in creating the underlying monetary claim” is not necessarily required to be immediately subject to the regulation if the cross-border collection agency service is provided by a person who is deemed economically integrated with the receiv - er or if it is subject to regulation under other laws or ordinances. Conversely, it is believed that other “cross-border collection agency services performed by a person who is not involved in creating the underlying monetary claim” , should essentially be subject to the regulations appli - cable to “exchange transactions” services. Based on the argument in the 2025 Report, a key point is whether the person who acts as a cross-border collection agency is involved in the transaction that creates the underlying monetary claim for which the person acts as a cross-bor - der collection agency. For example, if a person who is not involved in the transaction that cre - ates the underlying monetary claim is entrusted only to receive payment for the transaction, and the payment from the payer to the receiver is a cross-border payment, it is likely to be subject to the regulations applicable to “exchange transac- tions” services and may require a licence such
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