JAPAN Law and Practice Contributed by: Tomoyuki Tanaka and Henry Tan, Anderson Mori & Tomotsune
published the Guidelines for Cybersecurity in the Financial Sector in October 2024. These Guidelines stipulate, among other things, that local banks should take the following meas - ures. • Maintain a management system dedicated to cybersecurity. • Identify, evaluate and control cybersecurity risks. • Ensure the security measures of its internal systems. • Prepare contingency plans in anticipation of cybersecurity incidents. investigating cyber - security incidents and preparing post-incident reports for the prevention of similar incidents. • Control third-party risks.
According to a report published by the FSA in June 2024, 99% of financial institutions have fully complied with the AMT/CFT guidelines based on reports from the financial institutions. However, as the on-site monitoring of the Fifth Round Mutual Evaluation of Japan by the FATF is planned in 2028, the Japanese government (including the FSA and the Ministry of Finance), plans to ensure that the AML/CFT management systems of local banks are appropriate and to enhance the AMT/CFT initiatives taken by local banks. To help achieve this, the FSA may also provide updates to the AML/CFT Guidelines as it deems necessary. Tightened regulations and engagement of the FSA may result in increased burdens on local banks to develop frameworks and personnel structures or to invest in systems relating to AML/CFT. Local banks that fail to adapt to these tightened regulations will be exposed to regula - tory risks, such as receipt of business improve - ment orders from the FSA.
11. Horizon Scanning 11.1 Regulatory Developments
Regulations regarding AML and sanctions have been tightened following the Fourth Round Mutual Evaluation of Japan by the FATF, which was published in 2021, in which Japan was rated as a country requiring enhanced follow-up. Fol - lowing the evaluation report, the deadline for full compliance with the FSA’s AML/CFT Guidelines was the end of March 2024.
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