Current State of Business Verification in Japan

Japan stands out on the list of global players in the leading economy. Its robust economy, excellent infrastructure, and reliable tax system make it a valued place for global investors. According to recent statistics, 49% of businesses consider  Japan an attractive destination as a test market, and 40.5% believe it suits business expansion. This article explores organizations’ complexities in achieving compliance transparency in the Japanese business ecosystem.

Challenges of Business Verification in Japan:

KYB verification in Japan is subject to many hindrances during company verification due to multiple reasons that hinder the know-your-business process, a few of which are stated below;

• Language Barrier:

Many business documents exist in Japan’s native language, which is the biggest impediment to company verification. Translating these documents without altering their meaning and purpose is another challenge, which creates a significant issue in company verification. Another hindrance is that the official business registry of Japan used for business verification is in Japanese. All the above-stated language differences can create communication gaps during business dealings, negatively influencing the business verification process. 

• Use of Old Technology:

Although Japan is the hub for modern technology, company verification still faces problems due to old-fashioned technology. Many banks in Japan still use fax machines to exchange essential documents, but they lack a comprehensive audit to track important documents, which is necessary for verifying business.

•  No details about Ultimate Beneficial Ownership:

The official business registry of Japan does not provide any beneficial ownership information. This impedes KYB Japan significantly because intricate ownership structures can increase risk during company compliance. The lack of transparency in beneficial owner structure can lead to serious regulatory non-compliance. 

• Jurisdictional limitations:

The KYB Japan lags behind many other jurisdictions in giving access to electronic submission of documents. Electronic filing is available for incorporation, but non-Japanese companies cannot access the relevant systems from overseas. This imposes more significant limitations on the business KYC and KYB for corporate clients. 

Primary Regulatory Bodies for Compliance:

Many regulatory bodies in Japan regulate corporate compliance to ensure transparency in business regulatory compliance. A few prominent bodies are listed below;

1. Financial Service Agency: 

The FSA is responsible for licensing and registering financial institutions and ensures that these institutions adhere to the regulations. The Financial service agency penalizes financial institutions for regulatory violations to make the marketplace a secure place for businesses. 

2. Ministry of Economy Trade and Industry: 

The METI is the critical regulator of Japan’s economic activities. It verifies the legitimacy of the business, ensuring that the company meets the regulatory standards and legal frameworks. It monitors the businesses for compliance with domestic regulations and international agreements and adheres to standard practices for business compliance

3. Fair Trade Commission: 

The FTC takes action against Violations by companies engaged in anti-competitive practices and imposes penalties. The FTC also ensures that Japanese businesses fully comply with export control regulations. 

Read More: Current State of Business Verification in Germany

Data Score of Business Verification for Japan:

The figure below shows the Data Score of information available and unavailable on Japan’s official registry for KYB verification.

Key Beneficial Ownership Information – Japan:

The figure below shows the ultimate beneficial owner information available on the official registry for company verification in Japan.

How can The KYB help?

The KYB has consolidated business data from 200+ countries and states, giving access to multiple registries in one go. Another critical aspect of The KYB that facilitates business verification in Japan is Ultimate beneficial owner identification. The KYB includes details of beneficial owners that help accurately navigate intricate ownership structures and secure themselves from sanction compliance. It also helps comply with AML regulations by performing Know Your Business while verifying businesses.

The KYB retrieves business information to verify businesses from multiple official registries in Japan. A few of them are stated below;

Japan External Trade Organization: The KYB  retrieves the trade data and market research guide and assists in navigating the regulations and Japanese business practices. 

National Tax Agency—Houjin Bangou: It adds to The KYB data points by providing tax data and business information for corporate verification.

IDEC Yokohama: The IDEC Yokohama adds to the data points by giving information about the economic trends, business developments, and industrial opportunities 

Financial Services Agency: The KYB retrieves licensing and registration information about the businesses and facilitates KYB for corporate clients. 

Tokyo Stock Exchange: It adds to the data points for corporate compliance by providing data about the Japanese financial market and other data about regulatory insight.

Japan Platform for Patent Information: This data source helps retrieve patent information and intellectual property in Japan.

The KYB helps you avoid the hassle of navigating multiple resources by providing business information in a single consolidation on one platform.

For all kinds of queries regarding business verification services, get in touch with our team for all details.