Foreign Exchange and Foreign Trade Act

The competent minister must establish, by order of the competent ministry, standards to be complied with by a person prescribed by Cabinet Order as a person, among banks or other forms of financial enterprise, funds transfer service providers, and currency exchange operators, for whom it is found particularly necessary to establish a system for confirming whether a transaction or action stated in the items of the following paragraph applies (hereinafter referred to as a "foreign exchange transactions service provider") when engaging in the making or receiving of a payment, conducting a funds transfer transaction involving the making or receiving of a payment by its customer (including where an electronic payment instruments service provider, etc. conducts a transfer of electronic payment instruments or any other prescribed action involving the making or receiving of a payment by its customer; the same applies in paragraph (2), item (iii) and the following Article), conducting a capital transaction (meaning a capital transaction prescribed in Article 21, paragraph (1), and including where a person stated in the following items conducts the action prescribed in the relevant item), or conducting a specified capital transaction (referred to as "foreign exchange transactions or similar transactions" in paragraph (3) and the following Article) (hereinafter referred to as "compliance standards for foreign exchange transactions service providers").

an electronic payment instruments service provider: an action as prescribed in Article 2, paragraph (10), item (iv) of the Payment Services Act;

an electronic payment handling service provider: an action prescribed in the items of paragraph (17) of Article 2 of the Banking Act;

an electronic payment handling service provider for Shinkin Bank: an action prescribed in the items of paragraph (2) of Article 85-3 of the Shinkin Bank Act; or

an electronic payment handling service provider for credit cooperatives: an action as prescribed in the items of paragraph (2) of Article 6-4-3 of the Act on Financial Business by Cooperatives.

The compliance standards for foreign exchange transaction service providers are to provide for necessary matters to confirm whether or not the transactions or actions in question fall under any of the following items:

making or receiving of a payment for which it has been made obligatory for persons to get permission of the competent minister pursuant to the provisions of Article 16, paragraphs (1) and (3);

making or receiving of a payment as prescribed in Article 16, paragraph (5) (limited to making or receiving of a payment in connection with transactions or actions prescribed by Cabinet Order);

a funds transfer transaction involving a payment that is made or received by its customer (limited to those stated in items (i) and (ii));

a capital transaction for which it has been made obligatory for persons to get permission of the Minister of Finance pursuant to the provisions of Article 21, paragraph (1); and

a specified capital transaction for which it has been made obligatory for persons to get permission of the Minister of Economy, Trade and Industry pursuant to the provisions of Article 24, paragraph (1).

A foreign exchange transactions service provider must conduct foreign exchange transactions or similar transactions in accordance with the compliance standards for foreign exchange transactions service providers.

If the competent minister finds it necessary to ensure that foreign exchange transactions or similar transactions are properly conducted (excluding when the competent minister finds that the foreign exchange transactions service providers have conducted a funds transfer transaction involving a payment that is made or received by its customer in violation of the provisions of Article 17 (including as applied mutatis mutandis pursuant to Article 17-3 and 17-4, paragraph (1))), the competent minister may provide the necessary guidance and advice to the foreign exchange transactions service providers so that they will conduct foreign exchange transactions or similar transactions based on the compliance standards for foreign exchange transactions service providers.

If the competent minister, having issued guidance or advice under the preceding Article, subsequently finds that the foreign exchange transactions service providers continue to be in violation of the compliance standards for foreign exchange transactions service providers, the competent minister may issue a recommendation for the foreign exchange transactions service providers to comply with the compliance standards for foreign exchange transactions service providers.

If a person that is issued a recommendation under the preceding paragraph fails to follow the recommendation, the competent minister may order that person to take the recommended measures.

The provisions of Article 17-2, paragraph (2) apply mutatis mutandis if the competent minister issues an order under the provisions of the preceding paragraph (limited to an order in connection with those stated in Article 55-9-2, paragraph (2), item (iii)) to a bank or other prescribed financial institution or a funds transfer service provider or an electronic payment instruments service provider, etc. In this case, the term "the preceding paragraph" in Article 17-2, paragraph (2), is deemed to be replaced with "Article 55-9-4, paragraph (2)" and the term "a foreign exchange transaction" is deemed to be replaced with "a foreign exchange transaction or a transfer of electronic payment instruments or any other prescribed action."