# Japan Moves Banks and Crypto Exchanges to Chip-Based KYC Early

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/29069
Published: 2026-10-09T14:26:36.000Z
Updated: 2026-10-09T14:26:36.000Z
Section: Regulation

> The Financial Services Agency urged firms to transition before amended rules formally take effect April 1, 2027, after breaches exposed identity-document images.

Japan’s Financial Services Agency urged banks and crypto-asset exchanges to move from uploaded identity-document images to IC-chip-based customer checks before new rules take effect April 1, 2027.

The agency said recent unauthorized-access incidents exposed customer information, including driver’s license images. It told financial institutions to review cybersecurity protections covering third-party risk and incident response.

For remote onboarding, firms were instructed to examine identity-document images and applicants’ facial images for signs of manipulation. The guidance also asks institutions to begin replacing image-based checks as soon as possible instead of waiting for the legal deadline.

The amended framework, adopted June 24, 2025, will eliminate identity verification based on receiving uploaded images of identity documents and make reading embedded IC-chip data the standard method in principle.

Financial Services Minister Satsuki Katayama said institutions should “properly implement identity verification processes, including reading integrated circuit chip data.”

Japan’s Financial Services Agency and Bank of Japan separately warned the financial sector in May about cybersecurity threats associated with frontier artificial intelligence. The latest notice does not say artificial intelligence caused the breaches or directly prompted the KYC timetable. The formal rule change begins April 1, 2027.