What is the Financial Services Agency?
The Financial Services Agency, or FSA, is a Japanese government entity responsible for supervising banking, insurance, securities, and exchanges.
The role of the Financial Services Agency is to ensure the stability of the Japanese financial system; the protection of depositors, policyholders and securities investors.
It is responsible for the inspection, supervision and transparency of the financial system through the Securities and Exchange Surveillance Commission. It also oversees the country’s Chartered Accountants and Audit Oversight Council.
The FSA was created in July 2000 under the jurisdiction of the Financial Reconstruction Commission through the reorganization of the Financial Supervisory Agency. It is headquartered in Tokyo.
Understanding Financial Services Agencies (FSA)
Following the reorganization of Japan’s central government ministries, the Financial Services Agency, which is written 金融庁 in Japanese and pronounced Kinyucho, became an external entity of the Cabinet Office.
It has a commissioner and reports on its activities to the country’s Minister of State for Financial Services. The FSA is engaged in planning and policy-making for the Japanese financial system, supervising private sector financial institutions, developing market trading rules, developing standards for business accounting, supervision of CPAs and audit firms, compliance with financial market rules, etc.
An example of financial services agencies in action
As part of its oversight of the country’s financial activities, the Financial Services Agency of Japan recently took a close look at cryptocurrency exchanges.
In April 2018, it was reported in Forbes that, in an effort to help prevent money laundering and stem criminal activity on the dark web, the FSA was pressuring these exchanges to stop operating certain cryptocurrencies that are particularly popular with cybercriminals and hackers.
The FSA is said to have taken “every available measure to discourage the use of certain alternative virtual currencies which have become attractive to the underworld because they are difficult to track,” according to the Forbes article.
In some cases, the agency has even ordered the closure of specific cryptocurrency exchanges. In early April 2018, the FSA demanded that two exchanges cease operations for a few months as it worked towards stable regulation following the theft by hack of around 58 billion yen, or more than $532 million, from the Tokyo Coincheck crypto exchange.
FSA previously had instituted a licensing requirement for Japan cryptocurrency exchanges. After the hacking incident, the agency ordered Coincheck to investigate the theft and asked it to submit a written report with plans to prevent it from happening again.