Customer Identity Verification in Japan and Incoming Technical Challenges / 日本におけるお客さま本人確認と今後の技術的課題

Merpay’s KYC Team is dedicated to customer identity verification topics, enforcing compliance of our system to be aligned with the latest law and regulation updates in order to keep Mercari’s services safe for our users.
Regulations specific to online KYC (eKYC) have been introduced, and Japan’s online system is operating mostly smoothly so far. However, with the recent legislation changes around the My Number Card, and discussions beginning about innovative technologies such as Deepfake, the online identity verification landscape may change significantly in the future.
In this talk, Mann, Chris, and Tim from the KYC Team will discuss the history of identity verification in Japan, its most recent evolution, and the potential incoming challenges that Japan might have to face in the future.

メルペイのKYCチームは、メルカリのサービスをお客さまにとって安全なものにするため、最新の法律や規制の更新に沿ったシステムのコンプライアンスを徹底し、お客さまの本人確認に関する取り組みに従事しています。
オンラインKYC（eKYC）に特化した規制が導入され、日本のオンラインシステムは現在のところほぼ順調に稼働しています。しかし、マイナンバーカードをめぐる最近の法改正やDeepfakeのような革新的技術についての議論が始まっていることから、オンライン本人確認の状況は今後大きく変化する可能性があります。
本セッションでは、KYCチームのMann、Chris、Timが、日本における本人確認の歴史、その最新の動向、そして今後日本が直面する可能性のある新たな課題について議論します。

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Merpay & Mercoin Tech Fest 2023は3日間のオンライン技術カンファレンスです。
IT企業で働くソフトウェアエンジニアおよびメルペイ・メルコインの技術スタックに興味がある方々を対象に2023年8月22日（火）、23日（水）、24日（木）の3日間、開催します。 Merpay & Mercoin Tech Fest は事業との関わりから技術への興味を深め、プロダクトやサービスを支えるエンジニアリングを知ることができるお祭りです。

今年のテーマは「Unleash Fintech」。 メルペイ・メルコインのこれまでの技術的な取り組みはもちろん、メルカリグループのFintech事業における新たな挑戦をお伝えします。 セッションでは事業を支える組織・技術・課題などへの試行錯誤やアプローチなど多面的にご紹介予定です。

メルペイ・メルコインが今後どのようにUnleash（解放）していくのか、ぜひ見に来てください。

■イベント関連情報
- 公式ウェブサイト：https://events.merpay.com/techfest-2023/
- 申し込みページ：https://mercari.connpass.com/event/286670/
- Twitterハッシュタグ： #MerpayMercoinTechFest
■リンク集
- メルカリ・メルペイイベント一覧：https://mercari.connpass.com/
- メルカリキャリアサイト：https://careers.mercari.com/
- メルカリエンジニアリングブログ：https://engineering.mercari.com/blog/
- メルカリエンジニア向けTwitterアカウント：https://twitter.com/mercaridevjp
- 株式会社メルペイ：https://jp.merpay.com/

Transcript

1. Session Title Customer identity verification in Japan and incoming technical challenges KYC Team
2. Tim Tosi France ➔ UK ➔ Japan! • AdTech, Mobility startup and FinTech Joined Merpay in January of 2020 • Backend Engineer and Tech Lead in KYC team • Engineering Manager (EM) from March of 2021 (currently KYC Team and MP CSTool Team) Merpay Engineering - EM
3. Manpreet Kaur India ➔ Japan! • Banking, Telecom, ecommerce Joined Merpay in October of 2021 • Backend engineer in KYC Team Merpay Engineering - Backend Engineer
4. Christophe Labonne France ➔ Japan! • Telecom, Big Data, FinTech Joined Merpay in June of 2021 • Backend Engineer and Tech Lead in KYC team • Tech Lead in MP CSTool team Merpay Engineering - TL
5. About questions We welcome your questions! Post to our YouTube chat or use X（Twitter） hashtag #MerpayMercoinTechFest
6. Customer identity verification in Japan and incoming technical challenges
7. Identity Verification before eKYC Identity Verification Act (本人確認法) 01 Act on Punishment of Organized Crimes and Control of Crime Proceeds (組織的な犯罪の処罰及び犯罪収益の規制等に関する法 律) 02 Act on Special Measures Concerning Narcotics and Psychotropic Substances Control (国際的な協力の下に規制薬物 に係る不正行為を助長する行為等の防止を図るための麻薬及び向 精神薬取締法等の特例等に関する法律) 03 Three laws covered what is now considered to be eKYC:
8. Identity Verification Act Goals International Crime Prevention 01 Domestic Fraud Prevention 02
9. Purpose of the Law Prevent criminals from laundering proceeds of crime 01 Prevent the creation of fictitious accounts used for fictitious billing fraud 02 Obliging financial institutions to perform identification procedures and preserve records 03 Require financial institutions to verify the identity of customers for certain transactions 04
10. When you should identify a customer When you start a transaction with a financial institution 01 Transfers exceeding 100.000 yens 02 Transfers via cash or checks where the amount exceeds 2.000.000 yens 03
11. Identity Verification, how? For individuals: Name, date of birth and address are required Following identification papers are accepted: • Residence card • insurance card • driver license • pension book • passport • residence card (for foreigners)
12. Identity Verification, how? (cont.) For corporations: The person in charge of the corporation will proceed to the identity verification On top of that, the corporation should deliver a certificate that shows: • The official name of the corporation • The location of its head office
13. Conditions to be considered verified The customer met directly with a staff from the financial institution 01 The customer provided an official identification paper 02 The customer provided a password or any kind of special identification known only to the customer 03
14. Issues that happened with the law School fees 01 Deposit frauds 02 Personal information collection 03
15. eKYC
16. Backdrop of events shaping current state of KYC July 1989 1990 July 1992 FATF Financial Action Task Force Ministry of Finance’s notice to perform identificaton Globally Japan FATF: The 40 recommendations The Anti-Drug Special Provisions Law 1st FATF and Japan mutual evaluation 1994 Terrorist attacks in the US 2001 The Act on Prevention of Transfer of Criminal Proceeds 2007 2018 Amendment of the Ordinance for Implementation of the Act
17. In compliance with the “Act on Prevention of Transfer of Criminal Proceeds” Why to perform eKYC?
18. 01 Criminalizing money laundering 02 Confiscating criminal proceeds 03 Preventing terrorism financing 04 AML/CFT: Important laws Imposing CDD and other necessary obligations
19. Document submission 01 Legitimacy of documents 02 Liveness check 03 Visual confirmation 04 eKYC: Identity verification of Customer Driver’s Licence 50% 20% My Number Card Residence Card 3% 30% 45% 48% 3% Others % of documents submitted for eKYC at Mercari
20. eKYC: Identity data verification Name (Last,first) Date of Birth Address Purpose of Transaction Occupation
21. eKYC at Mercari
22. Reads the electronic certificate for signature Confirms the validity with the public personal authentication service, JPKI eKYC using Integrated Circuit(IC) chip
23. eKYC using My Number card IC chip
24. FSA guidelines Foreign residents can use residence card or special permanent resident card only eKYC updates for foreign nationals Additional information to submit: Nationality, Visa type, Card expiration
25. Potential public reception
26. Emerging new threats: Deepfake
27. Emerging new threats: Countermeasures Bypass eKYC process with synthetic video generation • Merpay X R4D project • Big thanks to Matthieu Destephe
28. A possible future for eKYC: MyNumber About the “Partial Revision of the Law Concerning the Use of Personal Identification Numbers to Identify Specific Individuals in Administrative Procedures” Sources: Japan Digital Agency
29. A possible future for eKYC: Not Flawless Jan 2016 MyNumber System Launch Official com. Reported Issues New Law Enacted Driver’s License Planned Integration Improper Residence Cert Issuance Health Insurance Info Linkage Error Bank Account Issue Announcement Oct 2021 May 2023 Jun 2023 Mar 2025 Sources: Asahi Shimbun / Mainichi / Japantimes
30. Let’s keep everyone safe !