Country Manual Private Banking
Japan – Update 2024
BRP has updated its Country Manual Private Banking for Japan out of Bank’s Country of Establishment (DEF, RS, BT & RT)
| Source of changes | Answers |
|---|---|
| Law / Regulation | No |
| New Position of the Authorities | No |
| Evolution of Expert’s Interpretation | Yes |
Regulatory Template, Regulatory Summary and Behaviour Template
Material changes
This Country Manual has been reviewed to ensure that the content of all the documents remains accurate and up-to-date. We can confirm that the regulatory framework for a foreign, unlicensed bank’s financial services directed towards or performed in Japan remains restrictive. There have not been any major changes since the last update of this manual.
Despite that, we have reviewed and adapted the documents based on an evolving interpretation of the regulatory framework following consultations with our local counsel and the following material information has been added for completeness of the regulatory framework.
Regarding the Foreign Securities Firm Exemption that allows for the provision of brokerage services for securities to Japanese residents from outside of Japan, the bank acting in reliance of this exemption from registration requirements may:
Provide unsolicited brokerage services for securities to Japanese residents from outside of Japan, irrespective of the category/type of client by receiving orders not only through agency or intermediary services of a registered Financial Instruments Business Operator (Type 1) who is authorized to engage in “securities related business” in Japan but also directly from the Japanese client. Other situations involving placing of orders by other locally licensed parties need to be analysed on a case-by-case basis.
Provide custody/depository services for money, securities or certificates to a Japanese client without triggering a licensing requirement in Japan when such custody/depositary services are inevitably associated to the provision of brokerage services (i.e., trading of securities) under this exemption (“Custodian/Depositary Services associated to brokerage services provided under the Foreign Securities Firm Exemption”).
Pure custody/depository services of securities (i.e. not associated to other banking and/or investment service for which a banking license or a FIEA license is needed; e.g. where the Bank will not be providing brokerage services) and including receiving principal and interest of such securities (“Pure Custody Services”), are not a regulated activity in Japan and may therefore be offered and provided by a foreign bank to Japanese clients without triggering licensing requirements in Japan. A careful analysis of the services to be offered is however needed to ensure that the offering/provision of Pure Custody Services will not derive in the triggering of banking and/or other investments licensing rules.
Non-material changes
Non-material changes have been made throughout the document, some comments have been reworded and additional references to applicable law/regulation have been added.
The comment “In reliance of an available exemption” has been added to brokerage services related activities in the BT to better reflect that this service may be provided pursuant to the Foreign Securities Firm Exemption (as was already the case in the previous version of the manual).
Implications for business relations with third parties
There has been no material change to the information previously contained in this section of the manual (activities of third parties do not require a license if they are exercised within a very limited framework), however additional level of detail has been included to cover each scenario by type of service. This section includes detailed information on the registrations needed by third parties to promote the bank and its different services (banking, investment, brokerage, custody), and to undertake related activities delegated by the bank. Registrations vary depending on the service to be promoted. Delegation of activities to a third party also need to be analysed on a service-by-service basis.
Due to the high level of complexity involved in working with third parties in Japan and the approach of the FSA to look at the foreign Bank and the third party cooperation as a whole (and not to activities in isolation) and on a case-by-case basis, a case-specific analysis is required before entering into business relations with third parties, and a cautious approach is advised.
Regulatory Summary
This document reflects the changes contained in the RT.
BT Short Comparison
BRP has created a comparison document allowing users to quickly identify the modifications made compared to the previous version of the PB Manual (BT Short Comparison). The BT Short Comparison can be found on BRP’s platform (mybrponline) in the Search tab by entering in the Document Field “CM PB BT SHORT COMP” and “JAPAN” in the Target Country Field.
The BT Short Comparison should be read as follows:
The first column contains a short description of the activity in question. The second column contains the answers of the previous version of the Country Manual (online until the day of the alert). The third column contains the new answers of the most recent version of the Country Manual. Only the modified answers are displayed (in color). If the answers in the new version are unchanged compared to the previous version, they are shaded in grey.
For more information, please contact us: info@brpsa.com
Geneva, September 24th, 2024