Clifford Chance

On 11 January 2022, the Financial Services Agency of Japan issued the final report of the Payment Services Working Group (PSWG). 

PSWG was established following the government's request to establish a safe and efficient regime for anti-money laundering (AML), which resulted from FATF fourth mutual evaluation.  PSWG has also reconsidered the regulatory regime for digital assets such as stablecoins.  Among others, PSWG makes the following suggestions:

Restructuring of regulations on stablecoins

With regards to stablecoins pegged to statutory currency, apart from the clearness of the licensing requirement for issuance of such stablecoins which requires issuers being banks or fund transfer service providers, it is suggested to introduce a consolidated licensing requirement for the intermediation of trades and to reconsider the legal structure of such stable coins.  Furthermore, with regards to stablecoins similar to cryptoassets, PSWG suggests further discussions on sufficiency of regulations such as scope of disclosure requirements.  

Introduction of a collaborative AML operation regime

As it is difficult for individual financial institutions to conduct sufficient AML activities, the banking sector intends to retain a third party and ask it to jointly conduct the filtering and monitoring of fund transfer deals.  Consequently, PSWG suggests introducing a licensing requirement for carrying out services concerning collaborative AML operations and regulations regarding the treatment of personal information by such entities.

Enhancement of AML regulations regarding prepaid payment instruments

While there is a licensing requirement for the issuance of prepaid payment instruments, currently issuers are not subject to AML regulations at the moment.  Considering money laundering trends, PSWG suggests it is necessary to extend the scope of AML regulations to issuers of prepaid payment instruments whose issued amount exceeds a certain threshold.