JAPAN Law and Practice Contributed by: Tomoyuki Tanaka and Henry Tan, Anderson Mori & Tomotsune
“Banking business” refers to: • the acceptance of deposits and lending of funds (including discounting of bills or notes); or • the conduct of fund remittance transactions. Registration as a money lender under Act No 32 of 1983 (the “Money Lending Business Act”) would suffice in the case of a person who only engages in the lending of funds. Registration as a fund service under Act No 59 of 2009 (the “Payment Services Act”) would also suffice for persons who only engage in fund remittance transactions subject to certain limitations. With regard to foreign banks, there are two ways by which a foreign bank may engage in “bank - ing business” in Japan. The first is to establish a local subsidiary or a local affiliate in the form of a stock company (k abushiki kaisha ). The second is to establish a foreign bank branch in Japan and obtain a banking licence for the branch in Japan. Local banks in Japan are, in principle, required to obtain a licence from the FSA if they wish to provide securities-related services in Japan. This licensing requirement is in addition to the banking licence that they are required to obtain. Local banks are required to have a subsidiary securities firm to engage in securities-related business. This is because the scope of securi - ties-related businesses that local banks are per - mitted to engage in is restricted compared to their subsidiaries that provide securities-related services in Japan. The Banking Act is premised upon the separa - tion of “banking” and “commerce”. Under the Banking Act, banks are only permitted to engage in core banking activities (ie, deposit taking,
lending and funds remittance), a limited scope of ancillary activities to banking activities, and certain securities-related businesses specified in the Banking Act. Under the Banking Act, activities, which are con - sidered ancillary to banking activities, include, among others, guaranteeing obligations, secu - rities lending, and acquiring and transferring monetary claims. Furthermore, the scope of the ancillary activities has been expanded following amendments to the Banking Act and relevant regulations, including the Guidelines. Recent amendments to the Banking Act clarify that the following constitute ancillary activities: • services that support the livelihood of cus - tomers; • IT systems and applications originally devel - oped by banks for internal use; • data analysis, marketing and advertising services; • temporary staffing services; and • consulting and business-matching services. Anyone seeking a banking licence must apply and submit supporting materials (such as arti - cles of incorporation and a certificate of regis - tered information in respect of the company) to the Prime Minister through the Commissioner of the FSA. The Prime Minister will endeavour to decide on the application within one month from their receipt of the official application. In practice, however, a preliminary consultation with the FSA and a review of the draft application will be conducted before submission of the official application. During the preliminary consulta - tion and review process, the government will scrutinise the application to determine whether it meets the relevant requirements. There is no
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