Japan Fintech & Crypto AML Regulatory Changes 2024–2026

AML Guide · June 2026 · RegTech

A regional bank that provides correspondent banking services to a crypto exchange, settlement accounts to a BNPL platform, or custody services to a digital asset fund does not simply face the risk of its own AML/CTF non-compliance.

Key Regulatory Changes: 2024-2026 Timeline

April 2024: Mandatory Travel Rule for Crypto-Asset Exchange Service Providers

Japan’s mandatory Travel Rule implementation for CASPs took effect in April 2024 under JVCEA (Japan Virtual and Crypto Assets Exchange Association) requirements implementing FATF Recommendation 16. CASPs are required to collect, verify, and transmit originator and beneficiary information for virtual asset transfers above prescribed thresholds.

Implication for banks: regional banks providing correspondent services, settlement accounts, or funding to CASPs should now include Travel Rule compliance assessment as a standard element of CASP counterparty due diligence. A CASP that cannot demonstrate Travel Rule compliance is carrying a regulatory risk that may affect the bank relationship.

April 2024: FSA FAQ Update on Domestic PEPs

Updated FSA FAQ guidance clarified domestic PEP obligations for all financial institutions, including those serving fintech and crypto clients. The obligation to screen for domestic Japanese PEPs applies across all customer segments and extends to verifying that fintech platform operators — who may themselves be domestic PEPs — have been appropriately identified.

2024: Stablecoin Framework Operationalisation

The 2022 Payment Services Act amendment creating the electronic payment instrument category was operationalised through FSA supervisory guidance during 2024. Stablecoin issuers, distributors, and service providers came within the AML/CTF perimeter as registered specified business operators. Banks providing funding, custody, or reserve management services to stablecoin issuers face specific due diligence requirements on the issuer’s own compliance programme.

31 March 2026: FSA AML/CFT Guideline Revision

The March 2026 guideline revision applies to all regulated financial institutions, including electronic payment service providers and CASPs. The new mandatory baseline applies equally to fintech and crypto sector participants as to traditional banks. Banks should assess whether their fintech and crypto counterparties have updated their programmes to meet the new mandatory baseline.

June 2026: PSA Amendment Effective Date

The 2025 PSA amendment brought a new category of crypto-asset intermediaries within the regulatory framework under a lighter registration regime. In these intermediary relationships, AML/CTF duties rest with the principal CASP — not the intermediary. This creates a specific due diligence requirement for CASP counterparties: assessing whether the CASP is meeting its obligations for its own intermediary network.

Counterparty Due Diligence Requirements for Fintech and Crypto Relationships

Mid-market banks maintaining business relationships with fintechs, electronic payment providers, or CASPs should conduct and document enhanced due diligence that addresses the following:

AML/CTF programme assessment: does the counterparty have a compliant AML/CTF framework in place, calibrated to its specific risk profile? Where the counterparty is subject to FSA supervision, confirm that no outstanding adverse supervisory actions are recorded.
Travel Rule compliance for CASP relationships: is the CASP meeting its April 2024 mandatory Travel Rule obligations? Request documentation of the CASP’s Travel Rule implementation and ask specifically about the technology solution deployed.
FSA registration verification: confirm current FSA registration status for any CASP, electronic payment service provider, or funds transfer service provider counterparty. Registration status can be verified through the FSA’s public registry.
Stablecoin issuer reserve management: for banks providing reserve management, custody, or funding to stablecoin issuers, assess the issuer’s compliance with electronic payment instrument service provider obligations and the adequacy of their AML/CTF programme for stablecoin-specific risks.
Ongoing monitoring of the relationship: the risk profile of a fintech counterparty can change rapidly — new product lines, regulatory actions, adverse media, ownership changes. Periodic re-assessment and continuous adverse media monitoring should be applied to all fintech and crypto counterparty relationships.

Frequently Asked Questions

Why must Japanese regional banks assess the AML/CTF programmes of their fintech and crypto counterparties?

The FSA’s counterparty due diligence expectations require banks to assess whether their business relationships expose the bank to AML/CTF risk through the counterparty’s own compliance gaps. A CASP or fintech platform with an inadequate AML/CTF programme represents an elevated-risk counterparty.

What are the key AML regulatory changes for Japan’s crypto sector in 2024-2026?

The key changes are: mandatory Travel Rule for CASPs (April 2024); FSA FAQ clarification of domestic PEP obligations (April 2024); stablecoin framework operationalisation (2024); FSA AML/CFT guideline revision (March 2026); and PSA amendment bringing crypto intermediaries within the framework (June 2026 effective date).

What Travel Rule due diligence should a Japanese regional bank conduct on CASP counterparties?

Banks should request documentation of the CASP’s Travel Rule implementation technology, confirm JVCEA Travel Rule guidance compliance, and treat non-compliance with the mandatory April 2024 obligation as a material risk factor in the bank’s assessment of the CASP relationship.

How should a bank assess whether a fintech counterparty has updated its programme to meet the March 2026 FSA revision?

Banks should include a specific question about the March 2026 revision in their counterparty due diligence questionnaire — asking whether the counterparty has conducted a gap assessment and what remediation actions are planned or completed.

How often should mid-market banks re-assess their fintech and crypto counterparty relationships?

At minimum, a formal annual review. Between formal reviews, continuous adverse media monitoring and periodic FSA registration status verification should be applied. Trigger-based re-assessment should occur immediately where a counterparty receives adverse FSA supervisory action or materially changes its business model.