Interpreting Administrative Actions Against Funds Transfer Service Providers (March 2023)
投稿日：2024年4月5日
This article is the English translation of a post published in Japanese on March 13, 2023.
#Press Release
The Kanto Financial Bureau announced on December 2, 2022, that it had revoked the registration of FSR Holdings Inc. (hereinafter referred to as “the Company”) as a funds transfer service provider. The reason is that the business location of the registered office could not be confirmed.
#Regulatory Explanation
According to Article 56, Paragraph 2 of the Payment Services Act, if the location of a funds transfer service provider’s office or the whereabouts of its representative is unclear, the Prime Minister may revoke its registration. Specifically, if the Prime Minister cannot confirm the location of the funds transfer service provider’s office or the whereabouts of its representative, this fact is to be announced according to the procedures prescribed by a Cabinet Order. If there is no claim from the relevant funds transfer service provider within 30 days from the date of announcement, the Prime Minister can revoke the registration of the funds transfer service provider.
#Expert’s Perspective
The case where the registration of a funds transfer service provider was revoked because the location of the registered office could not be confirmed. Funds transfer service providers have their main office locations registered and made available to the public. From the authorities’ point of view, this regulation is natural. If the location of the registered office cannot be confirmed, it raises doubts about whether the business actually exists. Additionally, it prevents the authorities from conducting necessary inspections (under Article 54 of the Payment Services Act, authorities can inspect the offices and other facilities of funds transfer service providers). Furthermore, without this regulation, some fraudulent funds transfer service providers could obscure the locations of their offices and the whereabouts of their representatives to evade regulation.
Regarding this case, it is doubtful whether the company’s business actually existed. Typically, businesses subject to administrative penalties issue some statements, but none could be confirmed in this case. While a website believed to belong to the company exists, there appears to be no evidence of the business being operated. Moreover, the authorities usually contact the business before imposing an administrative penalty and set a 30-day period for claims after the announcement, yet the issue was not resolved.
The revocation of a funds transfer service provider’s registration is not limited to cases where the location of the office or the whereabouts of the representative is unclear. The registration can also be revoked if the business meets the criteria for registration denial confirmed at the time of registration (Article 40, Paragraph 1 of the Payment Services Act), obtained registration through fraudulent means, operates as a type I funds transfer business without adhering to the approved business implementation plan, or violates the Payment Services Act, orders based on this Act, decisions based on these orders, or conditions attached to the approval. Funds transfer service providers need to maintain a compliance posture and operate their businesses according to legal requirements, not just at the time of registration but continuously thereafter.