Enhanced Due Diligence for Foreign PEPs: Required Documentation and Family Scope Under Japan’s Anti-Money Laundering Law
Did you know that when financial institutions and specified business operators conduct transactions with “Foreign PEPs (Politically Exposed Persons)” or their family members, standard identity verification alone is insufficient?
These transactions are defined as high-risk under Japan’s “Act on Prevention of Transfer of Criminal Proceeds (APTCP)” and require Enhanced Due Diligence (EDD). This article explains the often-confusing “scope of family members” and “required additional documentation” based on the latest standards for practical implementation.
What You’ll Learn in This Article
- ① Specific positions qualifying as Foreign PEPs and the scope of family members
- ② Combinations of “additional documents” required during identity verification
- ③ Key considerations regarding embassy personnel under the APTCP
1. Overview of Foreign PEPs and Legal Risks
Foreign PEPs refer to individuals holding “important public positions,” such as foreign government officials and judicial or military personnel. Due to their significant influence, they are considered high-risk for corruption and bribery, requiring strict verification under the APTCP.
[IMPORTANT] Key Considerations for Embassy-Related Matters
Diplomatic officials such as ambassadors extraordinary and plenipotentiary and ministers are typical examples of Foreign PEPs. Transactions involving these individuals are subject to strict application of the APTCP, making advanced monitoring including investigation of funding sources essential.
2. Definition and Scope of Foreign PEPs and Their “Family Members”
Under the APTCP, not only the individuals themselves but also their “family members” are treated as Foreign PEPs.
① Foreign Persons Holding Important Public Positions
Heads of state, prime ministers, cabinet ministers, speakers of parliament, supreme court justices, ambassadors extraordinary and plenipotentiary, chiefs of joint staff, central bank executives, government financial institution executives, etc. (*No grace period applies after leaving office)
② Scope of Family Members
Includes: spouses (including common-law partners), parents, children, siblings, and the parents and children of spouses.
③ Beneficial Owners
Cases where persons falling under ① or ② above substantially control a legal entity are also included.
3. Rules for “Additional Documentation” in Identity Verification
Transactions with Foreign PEPs (including family members) require “standard verification” + “additional verification.” The following structure is organized for easy confirmation, even on mobile devices.
Pattern A: Face-to-Face Transactions
[Standard Verification Documents] Presentation of photo-bearing identity documents (driver’s license, etc.)
+
[Additional Documents (any one)]
- Another identity verification document (passport, My Number card, etc.)
- Supplementary documents (utility bills, tax payment certificates, etc.)
Pattern B: Non-Face-to-Face (Mail/Online)
[Standard Verification Documents] Submission of copies of identity verification documents
+
[Additional Documents (any one)]
- Copy of another identity verification document
- Original or copy of supplementary documents
*Supplementary documents must be dated within 6 months prior to the presentation/submission date.
Important Note on Ongoing Contractual Relationships: When conducting transactions based on ongoing contracts (e.g., withdrawals from deposit contracts) where there is suspicion of impersonation or fraud, verification must be performed using at least one document other than those used when establishing the ongoing contract. For example, if verification was performed at the time of establishing a deposit contract (ongoing contract) by receiving copies of a driver’s license and My Number card and sending transaction-related documents, verification for high-risk transactions such as deposit withdrawals (transactions based on ongoing contracts) cannot be performed by presenting the same driver’s license and My Number card. At least one document other than these must be used.
4. Asset and Income Verification for Transactions Exceeding 2 Million Yen
When transactions involve property transfers exceeding 2 million yen, verification of “assets and income status” is required in addition to the additional documents.
- ① Presentation of withholding tax certificates or tax returns
- ② Presentation of bankbooks
- ③ For family members (such as non-income-earning spouses), asset/income documents of the PEP with whom they share household expenses may be substituted.
