September 9, 2024

Financial Stability Board
CH-4002 Basel, Switzerland
Japanese Bankers Association

JBA comments on the FSB Consultation Report: “Recommendations to PromoteAlignment and Interoperability Across Data Frameworks Related to Cross-borderPayments”
Dear FSB members:
The Japanese Bankers Association 1 (JBA) appreciates the opportunity to provide our comments on theFinancial Stability Board (FSB) Consultation Report: “Recommendations to Promote Alignment andInteroperability Across Data Frameworks Related to Cross-border Payments” (the “Consultative Report”)
released on 16 July 2024.
The JBA supports the FSB’s efforts and the general direction of the recommendations to address the identified
frictions from data frameworks that pose significant challenges to improving the cost, speed, transparency andaccessibility of cross-border payments, while maintaining their safety and security.
For instance, we agree with the proposed role of the Forum and the general idea of standardised legal entity
identifiers. However, from the perspective of efficiency and effectiveness, consideration should be given to
how private stakeholders will be involved in the activity of the forum in anticipation of the practicalimplementation of the recommendations in each jurisdiction. In addition, regarding standardised legal entity
identifiers, incentives for the private sector are necessary to promote the use of those identifiers. Thus, webelieve there are several points to keep in mind as discussions progress.
We hope that our comments will contribute to further discussions at the FSB.
***The Japanese Bankers Association is the leading trade association for banks, bank holding companies and bankers associations inJapan. As of August 1, 2024, JBA has 114 Full Members (banks), 3 Bank Holding Company Members (bank holding companies), 74Associate Members (banks & bank holding companies), 49 Special Members (regionally-based bankers associations) and one SubAssociate Member for a total of 241 members.
1Comments on the FSB consultation report:“Recommendations to Promote Alignment and Interoperability Across Data Frameworks Related to Cross-border Payments”
Questions

Comments

General1. Is the proposed scope of the recommendations appropriate for addressing

Yes, it is appropriate.

frictions arising from data frameworks in cross-border payments?
2. What, if any, additional issues related to data frameworks in cross-border―payments, beyond those identified in the consultative report, should beaddressed to help achieve the G20 Roadmap objectives for faster, cheaper,
more accessible and more transparent cross-border payments?
3. Is the proposed role of the Forum (i.e. coordinating implementation work

Yes, it is appropriate.

for the final recommendations and addressing existing and newly emerging
issues) appropriate?

We agree with the composition of the forum but how private stakeholders will be involved in the activity of the forum should
be carefully considered. Considering the nature of matters related to the regulation and supervision of internationalframeworks such as this consultation paper, it would be more effective and efficient to first deepen discussions among
regulatory authorities while sharing the discussions with the private sector in a timely manner. Then, if necessary, thoseauthorities should consult with private sector stakeholders in each jurisdiction basis. Such jurisdiction-based consultations will
enable the appropriate collection of opinions from the private sector that cannot be captured by an advisory group consistingof private stakeholders invited to participate on a voluntary basis, and will enable discussions that contribute to more effective
implementation at the jurisdictional level.
The scope of issues to be addressed by the forum is broad. Standardisation of the format of sanction lists which is indicated in
Recommendation 5 would be beneficial and thus should be prioritised at the forum.
In addition, since the transfer of data across borders need customer understanding in the practical implementation phase,public relations activities to gain public understanding should be considered by the forum, if necessary.

Section 1: Addressing uncertainty about how to balance regulatory and supervisory obligations
4. Discussions with industry stakeholders highlighted some uncertainties about―

how to balance AML/CFT data requirements and data privacy and protection
rules. Do you experience similar difficulties with other types of “dataframeworks” that could be addressed by the Forum? If so, please specify.
5. What are your suggestions about how the Forum, if established, should

We agree with the direction shown in Recommendation 2.

address uncertainties about how to balance regulatory and supervisory

Please refer to the response to Q3 for the composition of the forum.

obligations?
6. Are the recommendations sufficiently flexible to accommodate different

Yes, it is sufficiently flexible.

approaches to implementation while achieving the stated objectives?

1Questions

Comments

Section 2: Promoting the alignment and interoperability of regulatory and data requirements related to cross-border payments
7. The FSB and CPMI have looked to increase adoption of standardised legal

We agree with the general idea of standardised legal entity identifiers, but it is necessary to give consideration to the system

entity identifiers and harmonised ISO 20022 requirements for enhancing cross- development by market participants to adopt the identifiers. It would be difficult for market participants to consider theborder payments. Are there any additional recommendation/policy incentives

introduction of the identifiers without some support measures and incentives for market participants to invest in the system.

that should be considered to encourage increased adoption of standardisedlegal entity identifiers and the CPMI’s harmonised ISO 20022 data

In other words, we recognise that there is a cost-effectiveness challenge in implementing standardised legal entity identifiers.

requirements?

Although the use of standardised identifiers improves data quality and transparency, for example, since there are only a few
corporations in Japan that possess LEI, it is highly likely that the expected effect will not be achieved. In addition, theacquisition and maintenance of LEI is costly, and the development and maintenance of the system is burdensome, making it
difficult to use LEI as a standard business practice.
Therefore, incentives for the private sector are necessary to promote the use of standardised legal entity identifiers.
One of the purposes of the introduction of standardised legal entity identifiers is to reduce false positives of filtering inRecommendation 5 but it is unlikely to be very effective without an (globally unified) identifier which covers all legal entities
engaged in cross-border payments. If such a unified identifier is adopted and attached to each entity listed in the sanction
lists issued by national authorities, each financial institution can conduct transaction filtering using it. It will be helpful for
reducing false positives only after such a situation is ensured.
On the other hand, from the perspective of streamlining the process of alerts verification, such a public identifier would enable
more rapid and accurate verification, if some kind of public identifier is assigned to a legal entity, and if there is a database
about the legal entity that can be accessed by each financial institution.
However, from the perspective of financial inclusion, it is important to note that mandating the inclusion of such public
identifiers could potentially exclude certain jurisdictions of cross-border payments.
In addition, from the perspective of promoting the adoption of the CPMI’s harmonised ISO 20022 data requirements, thedetails of the “purpose of transaction” must be clear and confirmed in the case of inward payment, however information isusually not clear in many transactions and it is necessary for the beneficiary bank to confirm this information with therecipient one by one, so frictions in the processing of cross-border payments could continue to persist even as the CPMI’sharmonised ISO 20022 data requirements are adopted. Therefore, appropriate direction shown by the forum and others isneeded to remedy this situation.

8. Recommendation 4 calls for the consistent implementation of AML/CFT data

FATF Recommendation 16 stipulates the data required in payment messages for AML/CFT compliance. We would additionallyrequirements, on the basis of the FATF standards (FATF Recommendation 16

like to request a discussion about the standardisation of AML/CFT data formatting used for interbank exchanges. It is difficultin particular) and related guidance. It also calls for the use of global data

to respond to the RFI（Request for Information）because the contents of the RFI differ depending on the banks. It would bestandards if and when national authorities are requiring additional information.

helpful to further discussion about the standardised format of RFI to facilitate interbank exchanges of AML/CFT data.

Do you have any additional suggestions on AML/CFT data-related issues? If so,please specify.

2Questions
9. Industry feedback highlights that uneven regulatory expectations forComments―

sanctions compliance create significant frictions in cross-border payments
affecting the Roadmap objectives. What actions should be considered toaddress this issue?
10. Do the recommendations sufficiently balance policy objectives related toYes, they do.

the protection of individuals’ data privacy and the safety and efficiency ofcross-border payments?
Section 3: Mitigating restrictions on the flow of data related to payments across borders
11. The FSB understands that fraud is an increasing challenge in cross-border

Yes, they do.

payments. Do the recommendations sufficiently support the development ofHowever, as fraud methods are becoming more diverse and sophisticated day by day, case studies need to be updated

data transfer tools that specifically address fraud?

continuously.

12. Is there any specific sectoral- or jurisdiction-specific example that you―

would suggest the FSB to consider with respect to regulation of cross-borderdata flows?
Section 4: Reducing barriers to innovation
13. How can the public sector best promote innovation in data-sharing―

technologies to facilitate the reduction of related frictions and contribute tomeeting the targets on cross-border payments in 2027?
14. Do you have any further feedback not captured by the questions above?

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