Why financial firms ask for ID: AML and KYC explained
The paperwork at account opening is not a formality. It is a legal duty, and understanding it makes scam messages easier to spot.
Two abbreviations
AML stands for anti-money laundering: the rules and practices meant to stop the proceeds of crime from being moved through the financial system as if they were clean. KYC stands for know your customer: the part of AML where a provider confirms who it is dealing with. In Japan the main statute is the Act on Prevention of Transfer of Criminal Proceeds (犯罪による収益の移転防止に関する法律), usually shortened to the Criminal Proceeds Act. At an international level, the Financial Action Task Force (FATF) sets the standards that countries build their laws on.
This page explains the idea in general terms. It is not a description of how any particular firm runs its checks. This site has no customers and runs no such programme.
What a provider typically confirms
When you open an account with a bank or another firm covered by the Act, the provider generally has to confirm several things about you and keep a record that it did so:
- who you are: name, address and date of birth, checked against an official document;
- why you are opening the account or making the transaction;
- your occupation (for an individual) or the business of the company (for a legal entity);
- for a company, who actually controls it, often called the beneficial owner (実質的支配者).
Which documents are accepted depends on the provider and the method, online or in person. Common examples are a driver's licence, a My Number Card and a residence card. The provider will state what it needs on its own official page or application screen.
The same duty appears at several points
| Moment | What may be asked |
|---|---|
| Opening | Identity, purpose, occupation, source of the relationship. |
| Large or unusual transactions | A confirmation, or an explanation of the purpose of the payment. |
| Changes | A new address, a new name after marriage, a change of company officers. |
| Periodic review | A request to update details so the provider's records stay current. |
If you decline to provide information a provider is required to collect, the provider can refuse to open the account or to carry out the transaction. That is not rudeness on its part; it is the legal position it is in.
Real checks and scam messages look different
Phishing messages copy the language of identity checks: "your account will be suspended unless you confirm your details". A few habits protect you:
- Open the provider's app or website yourself, from a bookmark or the app you installed earlier, instead of tapping a link in a message.
- No genuine provider asks for a full password, a PIN or a one-time code by phone or message.
- A deadline of "today" or a threat of closure is a pressure tactic, not a procedure.
- When in doubt, call the number printed on your card or on the official site, not the number in the message.
More on checking a firm before you deal with it is in spotting risky offers. The basic terms are also listed in the glossary.
This is not compliance guidance. It does not tell a business how to meet its own obligations. A business that must follow the Act should read the statute and the FSA's guidelines directly.