Japan's FSA asks banks and crypto exchanges to drop photo-ID checks before the 2027 deadline

The FSA is using a request here ^[1][2]. The legal force sits in the amended Act on Prevention of Transfer of Criminal Proceeds, which applies from April 1, 2027 ^[2]. Counting from the October 9 notice ^[9], a bank or exchange that switches now pays for chip reading up to 174 days before the law requires it ^[13]. The agency kept the legal date and asked firms to spend ahead of it ^[2].

The case for haste is the stock of images already in circulation. In the Times Car breach, about 1.6 million identity-verification documents sat among roughly 6.6 million exposed user records ^[3], so about 24% of what leaked was ID material ^[14]. The exposed records also outnumber the company's membership by about 1.2 million ^[4][15]. According to Cryptopolitan, the FSA's notice recalled its May 2026 request with the Bank of Japan on frontier AI threats ^[9]. The outlet says the most capable models make it easier to turn leaked ID images into impersonation material ^[18]. It also reported that AI-assisted hackers using the open-source tool ARTEX and Claude Code attacked seven South Korean financial institutions ^[17]. Anyone holding the file can resubmit a photographed license. A chip read needs the card itself, held to a smartphone ^[6], and the FSA believes the method is far more effective against fraud ^[12].

The months before April 2027 can go three ways. Firms could treat the request as the deadline and cut over early. They could wait for the law and build once. Or the FSA could keep stacking requests, as it has with exchanges: on August 6 it and the National Police Agency asked every crypto-asset exchange operator, through the JVCEA, to strengthen document authenticity checks and withdrawal limits ^[10].

I think the exchanges move first. They have now received two FSA requests on identity checks 64 days apart ^[10][16]. The counter-case is that a request with no new legal date lets any firm build once against the 2027 rule and spend nothing extra this year. Cryptopolitan's report does not include a cost estimate, so the size of that saving is unknown. If exchanges are still taking photographed IDs in the first quarter of 2027 and the FSA has issued nothing further, the request worked as guidance and this view is wrong.