JAPAN Trends and Developments Contributed by: Takaharu Totsuka, Keisuke Hatano and Tomoki Kashimura, Anderson Mori & Tomotsune
and several obligors, or any other method similar thereto, are deemed to be “Fund Transfer Ser - vices”. Furthermore, even where neither Item (i) or Item (ii) of Article 1-2 of the Cabinet Office Ordinance is applicable, a “Payment Collection Service” is deemed to be a “Fund Transfer Service” if the purpose of the “Payment Collection Service” is not to provide a so-called “escrow service” under Item (iii)(a) of Article 1-2 of the Cabinet Office Ordinance. This will not be the case where a platform operator does not receive funds (such as goods or service fees) on behalf of an indi - vidual Beneficiary for a transaction executed on the platform under Item (iii)(b) of Article 1-2 of the Cabinet Office Ordinance. Overview of cross-border payment collection services In recent years, cross-border “Payment Collec - tion Services” (where creditors are located out - side Japan and debtors are in Japan, or where creditors are in Japan and debtors are located outside Japan) have appeared, and some of the providers of these services have not obtained registration as a “Fund Transfer Service Pro - vider”. It is thought that unlike domestic “Payment Collection Services” (where both creditors and debtors are in Japan), cross-border “Payment Collection Services” might compromise the pro - tection of users as there is a risk of payment delays due to the use of overseas remittance services and risks of money laundering and ter - rorist financing. The FSA’s stance on cross-border payment collection services In 2023, in response to comments received by the FSA, the FSA clearly expressed the follow -
ing position for the first time (the “FSA’s view in 2023”): “For Payment Collection Services involving pay - ments to/from persons located overseas, the flow of funds is more complicated than typical Payment Collection Services (ie, Payment Col - lection Services where funds are collected from debtors located in Japan, and such funds are transferred to creditors also located in Japan). Therefore, we (ie, the FSA) believe that busi - ness operators that provide Payment Collection Services involving payments to/from persons located overseas are in many cases required to register as Fund Transfer Service Providers due to the fact that the risk of: • an encroachment on user protections; and • the occurrence of money laundering/terrorist financing, are both high in view of the nature of the business.” In light of the FSA’s view in 2023, in general, conducting a “Payment Collection Service” on a cross-border basis would require a “Fund Trans - fer Service Provider” to register even if the “Pay - ment Collection Service” satisfies the Require - ments in 2019 (in cases where creditors are business operators) or does not fall under Article 2-2 of the PSA (where creditors are not business operators). However exceptionally, in practice, this seems not to be required for credit or debit card-based payments settled through interna - tional networks (VISA, MasterCard, AMEX, etc) due to historical circumstances. Future outlook for regulations on cross- border payment collection services As for the FSA’s view in 2023, it is not clear: • why it can be said that “the flow of funds is more complicated than typical Payment
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