A new Law on Customer Identification by Financial Institutions came into effect in Japan today. “With the enactment, the identification procedures which had already been in place under the guideline of the Japanese Bankers’ Association will become legally mandatory practice, violation of which will result in penalty,” explains a spokesman for BTM in Tokyo. “Basically the enactment will not have any effect on our clients as BTM as custodian bank has already undertaken necessary identification procedures upon opening of accounts. However, there may be cases where we may ask clients for identification documents.” The spokesman adds that some securities houses in Japan will ask custodians to present identification documents of their clients, as accounts in the clients’ names will be opened with the securities companies.
The new procedures are necessitated by the fact that Japan signed the 1999 United Nations International Convention for the Suppression of the Financing of Terrorism” in October 2001, following the attack on the Twin Towers. The Japanese Law on Identification Confirmation was enacted in response to this Convention, which calls for banks and other financial institutions to introduce identification confirmation procedures to counter money laundering and terrorist financing. The Law on Identification Confirmation and the Foreign Exchange and Foreign Trade Law (Amended) are the means by which Japan has complied with these requirements.
BTM points out that in the case of tender offers and takeover bids, some brokers will require applicants to submit identification documents via a local Japanese custodian unless they already have an existing account with the broker who has been appointed as the agent for the offer or takeover.