LPA Asia Smart News

9 March 2026

Through this newsletter, we offer you a regular selection of legislative and judicial decision insights prepared by LPA lawyers from our six Asian offices as well as some recent news from our teams.

LEGAL INSIGHTS ASIA

Vietnam

Vietnam strengthens data protection framework

From dream to reality: Vietnam’s next chapter of investment liberalisation

Hong Kong

CFA confirms tort of harassment and clarifies employers’ right to injunctive relief – Sir Elly Kadoorie & Sons v Bradley

China

New guidelines on non-compete clauses in China: what companies need to know

Singapour

Singapore Employment Law: March 2026 updates

Japan

Japan : major reform of cross-border collection services under the amended payment services act (effective by June 2026)

NEWS FROM LPA

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LEGAL INSIGHTS IN ASIA

Vietnam strengthens data protection framework

Decree 356/2025/ND‑CP – effective 1 January 2026

Vietnam has taken another major step in building a modern privacy regime. Following Decree 13/2023/ND‑CP, the Government has now issued Decree 356/2025/ND‑CP, which replaces Decree 13 and provides detailed guidance for the Personal Data Protection Law.

This new decree expands definitions, tightens compliance obligations, and introduces sector‑specific rules for emerging technologies. Together, these changes align Vietnam more closely with global privacy standards.

At a glance – key updates

• Sensitive Data Expanded Includes bank card details, transaction histories, financial/credit information, securities, and insurance records.
• Consent Rules Strengthened No default settings; consent must be explicit and informed.
• Data Subject Rights Enhanced Requests for withdrawal, modification, or deletion must be handled within 2–20 working days.
• Cross‑Border Transfers Regulated Detailed contracts required, covering purposes, categories of data, timelines, and responsibilities.
• Sector‑Specific Safeguards Introduced Tailored compliance rules for finance, big data, AI, blockchain, and cloud computing.
• Qualified DPOs Required Every entity processing personal data must appoint a Data Protection Officer with formal qualifications and experience.
• Regular Impact Assessments DPIAs and CTIAs must be updated every six months or after major organizational changes.

Spotlight: sector‑specific safeguards

• Finance & Banking: Annual compliance reviews, anonymization of financial data, and mandatory breach reporting within 72 hours.
• Big Data: Purpose limitation, strong encryption, multi‑factor authentication, and regular staff training.
• AI & Metaverse: Automated processing must be disclosed; opt‑out options required; annual compliance reviews.
• Blockchain: Only encrypted or hashed data may be stored; direct storage of personal data prohibited.
• Cloud Computing: Contracts must explicitly cover compliance; encryption at rest and in transit required; subcontractors must comply.

CTIA & DPIA – compliance tools

• CTIA (Cross‑Border Transfer Impact Assessment): Required before sending personal data abroad. Documents parties, purposes, categories of data, consent, and security measures. Must be submitted within 60 days and updated every six months.
• DPIA (Data Processing Impact Assessment): Required for domestic processing. Evaluates risks, consent procedures, storage/deletion policies, and safeguards. Must also be submitted within 60 days and updated every six months.

Decree 356 raises the bar for transparency, accountability, and security in Vietnam. Organizations must act quickly to update policies, contracts, and technical safeguards to remain compliant.

 // Etienne Laumonier / Ho Nhat Toan

 

From dream to reality: Vietnam’s next chapter of investment liberalisation

When we recently imagined Vietnam without investment certificates, we saw it as « science fiction », a dream of what could be possible if bureaucracy were replaced by transparency, and administrative control gave way to market discipline.

Six months later, Vietnam has not abolished its investment law, but it has taken an unmistakable step toward that imagined future. The Law on Investment 2025 (Law No. 143/2025/QH15) marks a key evolution of Vietnam’s investment framework. It does not erase the system, but it undeniably reshapes it. The dream is no longer fiction. It has begun to materialise.

1. A structural shift: from gatekeeping to governance

The new Law on Investment 2025 represents a decisive shift away from pre‑entry control and toward post‑inspection regulatory administration.

Where the prior regime relied heavily on prior approvals, often involving multiple layers of licensing, appraisal, and waiting, the new law sharply reduces the number of conditional business lines, removing 38 sectors entirely and redesigning many others. This recalibration pushes Vietnam away from the traditional permission‑based model and closer to modern regulatory approaches used in OECD countries.

One of the most consequential practical effects is a reduction in the State’s gatekeeping role. Ministries and local authorities no longer serve as overarching arbiters of “who may enter the market.” Their function now tilts toward monitoring compliance, supervising risk, and ensuring transparent operational conduct. This is the same administrative realignment envisioned in our legal fiction but now grounded in statutory reality rather than theoretical imagination.

2. Foreign investors: company first, project second

Perhaps the most anticipated change is Vietnam’s reversal of investment sequencing for foreign investors.

For the first time, foreign investors may: establish a wholly foreign‑owned company before obtaining an Investment Registration Certificate (IRC)[1].

This seemingly small procedural shift carries symbolic weight: it recognises the company as a legal entity first, and the investment project as an activity conducted by that entity—not the other way around.

While implementation details will be clarified in the forthcoming decree, the new model sends a powerful message of equal treatment, aligning foreign investor procedures more closely with those applied to Vietnamese enterprises. Although investors still cannot implement the project without an IRC or policy approval, the barrier to market entry becomes lower, earlier, and more predictable.

The vision of a “permission‑free” market remains aspirational, but the direction is unmistakably toward simplification.

3. Greater clarity in policy approvals

In contrast with the previous law’s more open‑ended criteria for when an investment policy approval was required, the 2025 law provides an explicit list of 20 categories of projects subject to approval.[2] These include:

• sensitive land‑use conversions,
• major infrastructure works,
• regulated industries such as nuclear or aviation,
• projects requiring special mechanisms not provided under existing laws.

This change provides much‑needed predictability. The boundaries of State approval authority are now codified, reducing discretion and improving consistency across provinces.

4. Special investment procedures: fast‑tracking the future

The new law expands and formalises the Special Investment Procedure, enabling eligible projects—especially in industrial parks, high‑tech zones, free trade zones, and digital technology clusters, to bypass several traditional approvals.

In practical terms, qualifying investors may replace:

• environmental impact assessments;
• construction permits;
• fire safety evaluations;
• technology appraisals

with statutory commitments and compliance undertakings.

5. Duration extensions: certainty for long‑term capital

One of the most investor‑friendly reforms is the flexible and clearer mechanism for extending project duration. The new law expressly confirms:

→ Extensions may be granted multiple times,

→ within the statutory caps for each extension,

→ except for projects using outdated technologies or requiring uncompensated handover.

This fosters confidence, critical for large‑scale manufacturing, energy infrastructure, logistics hubs, technology parks, and high‑capital investments.

6. Outward investment: a cleaner, leaner framework

Vietnamese investors venturing abroad will also benefit from simplification. The new law eliminates certain outward investment policy approvals previously required from the Prime Minister or National Assembly and narrows the types of projects requiring an Outward Investment Registration Certificate.

This not only streamlines administrative burden but strengthens Vietnam’s evolving position as a regional investor, not merely an investment recipient.

The imaginary Vietnam described in The Great Investment Liberation—a nation without investment approvals, where business procedures match those of the U.S., Japan, or Germany, remains a dream, but the Law on Investment 2025 shows that Vietnam’s policymakers are actively moving toward lower regulatory friction, clearer rules, and a more facilitative investment climate.

[1] Art 19.2. A foreign investor is entitled to establish an economic organization to execute an investment project before following the procedures for issuance or adjustment of an investment registration certificate and must satisfy the market access conditions applied to foreign investors upon following the procedures for establishing an economic organization.

[2] See Art. 24 of the Law on Investment 2025

// Etienne Laumonier / Pham​ Viet Anh

 

CFA confirms tort of harassment and clarifies employers’ right to injunctive relief – Sir Elly Kadoorie & Sons v Bradley

In a recent landmark decision, the Court of Final Appeal (“CFA”) confirmed the existence of a common law tort of harassment applicable to individuals. However, the CFA held that companies lack standing to bring claims under this tort, on the basis that a company, as “a legal person incapable of experiencing feelings”, cannot suffer harassment in the legal meaning.

Nevertheless, the judgment clarifies that corporate entities are not left without recourse. The CFA recognized that companies may seek injunctive relief in their own name in order to safeguard the safe working environment they are legally obliged to provide to their employees.

Context

According to the facts alleged in the plaintiff’s brief, Ms Bradley spent more than a decade working at Sir Elly Kadoorie & Sons Limited (the “Company”), a prominent Hong Kong-based family office, where she became head of the legal department. Following the anticipated departure of a director, Ms Bradley expressed her interest in assuming the role and continuing her professional progression within the Company. However, the Company ultimately decided not to appoint her to the position.

This decision marked the beginning of growing internal tensions, which eventually culminated in the termination of Ms Bradley’s employment in October 2020. The matter did not end there. Over the course of approximately 18 months following her departure, Ms Bradley sent more than 500 emails to the Company, its employees, agents, and external advisors. These communications contained serious allegations (alleged by the Company to be false), including claims of harassment, breaches of anti-money laundering (AML) obligations, and more broadly, allegations of fraudulent conduct.

Analysis of the judgment

In its judgment, the CFA was required to address 3 key issues: (a) whether a tort of harassment exists under Hong Kong common law, (b) if so, whether a company has a cause of action to sue under that tort, and (c) if not, whether alternative legal mechanisms (in particular, injunctions) are available to enable a company to restrain harassing conduct directed at its employees. The CFA’s conclusions can be summarized as follows:

• The CFA confirmed that a tort of harassment exists under Hong Kong common law in respect of individuals. The Court clarified that four cumulative elements must be established: (i) a course of repetitive conduct capable of causing distress; (ii) conduct of a nature that amounts to harassment; (iii) intention or recklessness on the part of the perpetrator; and (iv) resulting (psychological) damage suffered by the victim.
• The CFA nevertheless stated that companies cannot bring claims under the tort of harassment, as mental distress (or more serious forms of psychological harm) constitutes an essential element of the tort. In line with the jurisprudence Collins Stewart Ltd v The Financial Times Ltd, the CFA reiterated that “a company has no feelings to injure and cannot suffer distress”, and therefore lacks the capacity to satisfy the required elements of the tort.
• Importantly, the CFA recognized that corporate entities are not left without recourse. Extending by analogy the principles established in Broadmoor Special Hospital Authority v Robinson, the CFA held that an employer may seek injunctive relief in its own name to restrain conduct that interferes with its duty, under common law, to provide a safe working environment. This remedy is, however, strictly confined to the protection of current employees and applies only in respect of harassment arising in a work-related context.

Practical implications for the employers 

The present decision therefore gives employers a new tool to ensure a safe workplace, and can be seen as encouraging employers to implement internal mechanisms and preventive HR policies aimed at mitigating the risk of harassment from ex-employees or other outside parties affecting their employees. In this context, companies should extend these mechanisms beyond the physical workplace and they should apply equally to the digital environment, particularly considering the use of electronic communication tools such as Outlook, Teams, and Webex.

In practice, it would be advisable for employers to introduce appropriate monitoring, assessment, and reporting systems designed to enable employees to report hostile or harassing communications, ensuring that such conduct can be identified, addressed, and contained at the earliest possible stage. Employers should also ensure that all relevant evidence is properly documented and preserved, by any appropriate means, in order to support and substantiate a potential application for injunctive relief, where necessary.

With this recent decision, a failure by a company to seek an injunction to restrain harassment against its employees which it has become aware of by outside parties could be viewed as a breach of its common law duty to provide a safe working environment.

// Nicolas Vanderchmitt / Daniel Duane

 

New guidelines on non-compete clauses in China : what companies need to know

The Labor Contract Law of the PRC (the « Labor Contract Law ») is the primary legislation governing non-competition obligations in China. Companies may prohibit their concerned employees from working for competitors or running a competing business for a maximum period of 2 years following the termination of their employment. However, many companies have excessively or improperly used non-compete clauses, leading to numerous disputes.

The release of the Compliance Guidelines for Enterprises Implementing Non-Compete Agreements (the « Guidelines ») promulgated by the Ministry of Human Resources and Social Security of China, along with the Interpretation (II) of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (the « Interpretation »), provides useful guidance and clarifies key aspects. These include: (i) the preconditions for imposing non-compete obligations; (ii) the scope of eligible employees; (iii) geographical limitations; (iv) the standard for economic compensation and liquidated damages; and (v) remedial procedures for non-compete breaches.

Key takeaways

Preconditions: Access to commercial secrets  According to the Interpretation, where an employee is unaware of, or has no access to, the employer’s commercial secrets or confidential information related to intellectual property, and the employee requests a declaration that the non-compete clause is invalid, the people’s court shall uphold such request. It is therefore essential for companies to clearly identify and define the content and scope of their commercial secrets before imposing non-compete obligations.

Eligible employees: Only employees with actual access to commercial secrets may be subject to non-compete obligations. Companies should limit such obligations to senior management personnel, senior technical personnel, or key employees bound by confidentiality obligations. Employees outside these categories may assert the invalidity of their non-compete agreements.

Geographical limitations: Unlike previous practices, companies are requested to limit the geographical area of non-compete obligations to their actual operational area. Extending the geographical area to the entire country or worldwide without justified reasons may not be permitted.

Economic compensation: During the first year of the non-compete period, monthly economic compensation shall not be less than 30% of the employee’s average monthly remuneration. If the non-compete period exceeds one year, the compensation ratio should be increased to 50% or above.

Liquidated damages: In case of breach of non-compete obligations, liquidated damages shall not exceed five times the total amount of economic compensation agreed between the parties.

Recommendations for companies: To mitigate potential legal and compliance risks, companies are advised to review their existing non-compete agreements and ensure compliance with these new requirements. In particular, companies should: (i) clearly identify their commercial secrets; (ii) limit non-compete clauses to eligible employees only; (iii) define a reasonable geographical area; and (iv) ensure adequate compensation levels.

Our team remains at your disposal to assist you in reviewing your employment contracts and ensuring compliance with these new guidelines. Please do not hesitate to contact us for any questions.

// Fanny Nguyen / Hélène Liu

 

Singapore Employment Law: March 2026 updates

1. Key employment measures from the Committee of Supply 2026 by the Ministry of Manpower[1]

During the 2026 Committee of Supply Debate, Ministry of Manpower (“MOM”) unveiled a series of measures aimed at helping businesses and workers adapt to a rapidly evolving economic landscape. These initiatives reflect Singapore’s broader strategy to remain competitive in a global environment shaped by technological change, shifting labour markets and increasing demand for high-skilled talent.

The announced measures are structured around three main pillars: (1) empowering Singaporeans through all stages of life, (2) enabling thriving businesses in a changed landscape, and (3) building workplaces that work for all so that no one is left behind.

Among the most notable developments for employers and international mobility is the planned adjustment of the minimum qualifying salaries for key work passes[2]. The minimum gross monthly salary requirement for the employment pass will increase from SGD 5,600 to SGD 6,000, while the threshold of the S Pass will rise from SGD 3,300 to SGD 3,600. These changes will apply to new applications from 1 January 2027, and to renewals from 1^st January 2028. The Government has also indicated that the S Pass qualifying gross monthly salary could reach approximately SGD 4,000 to SGD 4,500 by around 2030, reflecting the ongoing alignment of foreign workforce policies with local wage benchmarks.

Another significant announcement regards Singapore’s strategy to attract global technology and artificial intelligence (“AI”) talent. From January 2027, the Government will introduce a new “ONE Pass” (AI and Tech) track, which will replace the current “Tech Pass”[3]. The new pass is designed to better recognise leading innovators and industry experts in AI and advanced technologies, further strengthening Singapore’s position as a global hub for high-value digital talent.

In parallel, the Government is also supporting businesses in adapting their workforce to technological transformation. Under the enterprise workforce transformation package[4], launching in March 2026, companies will be able to access financial support to redesign jobs, reskill employees and adopt new technologies, including AI tools. Through the SkillsFuture Workforce Development Grant (Job Redesign+), enterprises can receive funding covering up to 70% of qualifying project costs, capped at SGD 150,000 per company. The initiative aims to provide businesses with practical resources to implement workforce transformation while improving productivity and long-term competitiveness.

These measures illustrate Singapore’s continued effort to balance economic openness with workforce development, while ensuring that businesses remain able to attract global talent and adapt to technological change.

2. Retirement and re-employment ages from July 2026[5]

Singapore will gradually raise the statutory retirement age to 64 and the re-employment age to 69, effective 1^st July 2026. This follows the Government’s broader strategy to support longer careers and address demographic changes.

At the same time, the senior employment credit will be extended until December 2027. Under this scheme, employers hiring older workers can benefit from wage support of up to 7% for employees aged 69 and above.

These measures aim to provide older workers with greater flexibility to remain active in the workforce, while helping employers retain experienced employees and maintain workforce stability.

3. New central provident fund investment scheme in 2028[6]

The Central Provident Fund (“CPF”) board has announced the introduction of a new investment scheme expected to launch in the first half of 2028, aimed at helping CPF members potentially achieve higher retirement returns while maintaining a simplified investment approach.

The scheme will complement the existing CPF investment scheme and target members who are willing to take some investment risk but prefer simpler and professionally managed investment options.

Under the new framework, selected commercial providers will offer low-cost, diversified life-cycle investment products. These products will automatically adjust the asset allocation over time, gradually shifting from higher-risk assets such as equities to lower-risk assets such as bonds as members approach retirement. This automatic rebalancing is designed to help investors stay invested for the long term without needing to actively manage their portfolios.

Participation in the scheme will be entirely voluntary, and investment proceeds will eventually be transferred into members’ Retirement Accounts, supporting their future CPF lifelong income for the elderly retirement payouts.

The CPF board will begin engaging industry providers in March 2026, with selected providers expected to be announced in 2027, ahead of the scheme’s launch in 2028.

For more details: cpf.gov.sg/newinvestmentscheme

4. Highlights from the labour market advance release fourth quarter 2025[7]

According to the MOM’s labour market advance release for the fourth quarter of 2025, Singapore’s labour market continued to expand in 2025 alongside sustained economic growth. Total employment increased by 57,300 over the year, compared to 44,500 in 2024, with job creation driven mainly by the financial services and health & social services sectors for residents, and construction for non-resident workers.

Unemployment rates remained low and stable, standing at 2.0% overall, 2.9% for residents, and 3.0% for citizens in December 2025, broadly in line with levels observed over the past two years.

Retrenchments also remained relatively limited. Around 3,600 employees were retrenched in the fourth quarter of 2025, bringing the total to 14,400 for the year, slightly higher than in 2024. Most retrenchments were linked to business reorganisation or restructuring, particularly in sectors such as transportation & storage and financial services.

Looking ahead to 2026, the labour market is expected to continue expanding, although employers can adopt a more cautious approach to hiring. At the same time, a growing share of firms expects to increase wages, suggesting continued competition for talent in certain sectors.

The full report is available at: https://stats.mom.gov.sg/Pages/Labour-Market-Advance-Release-4Q-2025.aspx

 

[1] Ministry of Manpower’s website, “Partnering Businesses And Workers To Thrive In A Changed World”

[2] Ministry of Manpower’s website, “Foreign Workforce Policy Announcements At Cos 2026”

[3] Ministry of Manpower’s website, “Foreign Workforce Policy Announcements At Cos 2026”

[4] Ministry of Manpower’s website, “Factsheet on Enterprise Workforce Transformation Package”

[5] Ministry of Manpower’s website, “Partnering Businesses And Workers To Thrive In A Changed World”

[6] Ministry of Manpower’s website, “CPF Board to introduce new investment scheme in 2028 offering simplified, low-cost, and diversified commercial investment products”

[7] Ministry of Manpower’s website, “Labour Market Advance Release Fourth Quarter 2025”

// Astrid Cippe / Candy Xiong

 

Japan: major reform of cross-border collection services under the Amended Payment Services Act (effective by June 2026)

On June 6, 2025, the Act Partially Amending the Payment Services Act (the “Amended PSA”) was enacted. The amendment responds to the ongoing digitalization of financial services and aims to promote innovation while ensuring user protection. It revises the regulatory framework applicable to remittance and payment services (also called debt collection service – shuno daikō).

Under the Amended PSA, cross-border collection services are expressly classified, in principle, as “foreign exchange transactions” thereby bringing them within the scope of regulation applicable to Funds Transfer Service Providers. Article 2-2, Item (ii) of the Amended PSA clarifies that where an entity entrusted by the creditor or the debtor conducts a cross-border movement of funds between Japan and overseas in the form of a collection arrangement, such activity constitutes a regulated transaction which will require either:

• a banking license, or
• a registration as a Funds Transfer Service Provider.

Following the enactment of the Amended PSA, the Financial Services Agency (FSA) published draft Cabinet Office Ordinances and Administrative Guidelines on December 16, 2025, for public comment. The public comment period for these proposed regulations officially closed on January 19, 2026. These updates clarify specific exclusions and high-risk categories that define the new regulatory boundaries.

This reform marks a substantial policy shift. Historically, certain cross-border collection structures were considered capable of falling outside financial regulation if appropriately structured. The Amended PSA further detailed by the recent draft ordinances, removes much of this uncertainty by expressly bringing pure cross-border collection models within the regulated perimeter.

1. Regulatory impact on remittance and payment services

With respect to remittance and payment services, the Amended PSA introduces new rules governing cross-border collection agency services (so-called “cross-border shunō daikō”). Unless a statutory exemption applies, providers of such services will be required to obtain registration as a Funds Transfer Service Provider in light of user protection and anti-money laundering considerations.

The Amended PSA will enter into force on a date to be specified by Cabinet Order within 1 year from its promulgation (June 13, 2025). Accordingly, the revised regime is expected to become effective no later than June 12, 2026. Transitional measures are available for certain cross-border collection service providers (see Section 4 below).

2. Definition of cross-border collection services

Article 2-2, Item (ii) of the Amended PSA defines cross-border collection services broadly as acts that transfer funds between a debtor and a creditor (the “Recipient”), other than by direct delivery of cash, where funds are moved :

• from Japan to a foreign country, or
• from a foreign country to Japan.

Importantly, the statutory language clarifies that, where cross-border fund movements are involved, the “entrustment” from the Recipient includes multi-layered entrustments (i.e., re-entrustment or further re-entrustment).

As a result :

• In purely domestic collection arrangements, there will be no change in regulation.
• In cross-border arrangements, not only the directly entrusted party but also downstream subcontractors may fall within the scope of Article 2-2 and require a Funds Transfer Services licenses.

The FSA, in discussions of the Payment Services Working Group (4th session), has expressed the view that even where a foreign service provider is directly entrusted by an overseas Recipient, a domestic entity that receives instructions from such foreign provider involving fund transfers including Japan may itself be required to obtain Funds Transfer Service registration. The amended wording appears intended to codify this position.

Given the extremely broad formulation—“acts of moving funds from Japan to overseas or from overseas to Japan”—the key practical issue will be whether a specific arrangement qualifies for an exemption.

3. Exempted categories

The determination of the specific exemption categories has been delegated to the Cabinet Office Ordinance. Although the final text has yet to be promulgated, the public consultation on the draft amendment to the Cabinet Office Ordinance in connection with the Amended PSA closed on January 19,2026.

The draft Cabinet Office Ordinance, consistent with the recommendations set out in the 2025 Payment Services Working Group Report, confirms that the following categories are expected to be excluded from the definition of “foreign exchange transactions.”

Businesses should nevertheless exercise caution: the exclusions will not apply where the relevant structure or conduct gives rise to material user protection concerns.

A. Debt collection via banks or funds transfer service providers

Cross-border collection services will be excluded where a debtor makes payment to a bank or registered funds transfer service provider, which then delivers the funds to the payee. In multi-layered arrangements, the exclusion applies only if the collection function is formally re entrusted to the bank or funds transfer provider. Merely instructing the debtor to remit funds to an intermediary’s bank account or transfer account does not qualify for the exclusion.

B. Escrow services

Cross-border escrow services are expressly excluded from the scope of foreign exchange transactions. This reflects the same regulatory approach taken prior to the 2025 amendment, where escrow arrangements were already carved out in certain collection structures involving individual creditors.

C. Platform operators involved in the underlying contract

Cross-border collection conducted by transaction platform providers may also be excluded, provided that the platform operator plays an indispensable role in the formation of the underlying contract that gives rise to the monetary claim.

This exemption is intended to cover platform businesses that are directly involved in structuring or concluding the underlying commercial transaction, rather than merely processing payments.

D. Intra-group collection arrangements

Where the payee belongs to the same corporate group as the collection service provider, the arrangement may fall within the exclusion. This reflects the view that foreign exchange regulation is generally unnecessary where economic unity exists within a corporate group.

However, the exclusion will not apply if the payee acquired the claim for the purpose of circumventing foreign exchange regulation—for example, where a party acquires a claim from a third party and remits the collected funds back to the assignor.

E. Collection governed by other regulatory frameworks

Cross-border collection services relating to claims governed under other legal frameworks are also excluded.

This includes, in particular :

• Settlement between credit card issuers and acquirers under international card schemes;
• Collection services for credit card merchants; and
•  Collection relating to prepaid payment instruments issued by registered third-party issuers in Japan.

The rationale is that these sectors are already subject to separate regulatory oversight, reducing the need for additional foreign exchange transactions regulation.

F. Collection by delegated service providers

The exclusion also extends to cross-border collection conducted by :

• Service providers entrusted by escrow operators or transaction platforms; and
• Service providers acting under delegation from banks or registered funds transfer service providers.

These exclusions provide welcome clarification for a range of business models, particularly platforms, escrow services, intra-group structures, and card-related settlement arrangements. Nevertheless, businesses must carefully assess whether their activities could still be characterized as foreign exchange transactions, especially where user protection concerns arise or where the structure could be viewed as an attempt to avoid regulatory application. These high-risk categories include :

• Lack of agency authority for receipt (dairi-juryō): if the debtor’s legal obligation is not extinguished at the moment the service provider receives the funds, the transaction is considered high-risk.
• Cross-border collection services where fund delivery may be obstructed: this refers to the case where platform sub-delegates receipt/remittance to another provider and limits its responsibility to the selection and supervision of that provider.
• Gambling and unregulated investment schemes: collection services involving gambling funds (such as overseas online casinos) or funds for the acquisition of new securities and derivatives are strictly regulated.

4. Transitional measures

Entities currently engaging in activities that will qualify as foreign exchange transactions under Article 22 of the Amended PSA (i.e., cross-border collection service providers not covered by an exemption) benefit from transitional arrangements :

• For 6 months from the effective date of the Amended PSA, such entities may continue their business without registration as a Funds Transfer Service Provider.
• If an application for registration is filed within this six-month period, the applicant may continue operations without registration until a decision (approval or refusal) is rendered, provided that no more than 2 years have elapsed from the effective date.

Accordingly, non-exempt cross-border collection service providers must:

1. File an application for Funds Transfer Service registration within 6 months from the effective date and complete registration within 2 years from that date; or
2. Cease the relevant cross-border collection services within 6 months from the effective date.

In practice, obtaining registration requires prior consultation with the authorities and preparation of internal systems addressing compliance, governance, AML/CFT controls, and operational readiness. Businesses intending to pursue registration should therefore begin preparatory work well in advance of the effective date.

Practical takeaways

• The definition of cross-border collection services is intentionally broad and captures multi layered entrustment structures.
• Domestic entities involved indirectly in cross-border arrangements may fall within scope.
• The availability and scope of exemptions will depend on the forthcoming Cabinet Office Ordinance and related guidance.
• Transitional measures provide limited time to regularize operations.

Companies operating cross-border payment collection structures, particularly those limited to settlement functions, should conduct a comprehensive regulatory assessment of their business models, particularly where subcontracting, and prepare for potential registration requirements under the revised Payment Services Act.

LPA Tokyo remains available to provide further clarification or tailored strategic advice on how these changes may impact your organization, as well as to assist with the registration process under the revised Payment Services Act.

// Pascal Mages / Zoé Asseman

 

NEWS FROM LPA

Milestone | LPA Law expands its European footprint with the integration of Höhne, In der Maur & Partner in Vienna, strengthening its presence across the German-speaking region and bringing the total number of its worldwide offices to 15. LinkedIn

Team | Lisbeth Lanvers-Shah joins LPA Singapore as Of Counsel in the Corporate and M&A Department and Head of India Desk. LinkedIn

Team | Daniel Duane joins LPA Hong Kong as Senior Associate to reinforce the Corporate and M&A Department. LinkedIn

Team | Candy Xiong joins LPA Singapore as Associate in the Global Mobility and Tax team. LinkedIn

Appointment | Arnaud Bourrut-Lacouture, Managing Partner of APFL Partners and LPA Singapore, appointed French Foreign Trade Advisor for Vietnam. LinkedIn

Appointment | APFL Partners appoints Pham​ Viet Anh  and Nguyen Cong To, both from our Ho Chi Minh City office, as Of Counsel, with effect from 1 March 2026. Their promotion reflects their longstanding commitment to the firm and valuable contributions to our firm’s growth in Vietnam. LinkedIn

Ranking | APFL Partners has been recognised in the Chambers and Partners Global 2026 rankings across two practice areas in Vietnam: Corporate and M&A and Projects, Infrastructure & Energy. Partner Etienne Laumonier also individually recognised in Corporate and M&A. LinkedIn

Distinction | APFL Partners recognised in The A-List: Vietnam’s Top Lawyers 2025 with partner Etienne Laumonier named among the country’s leading practitioners. This distinction by Asia Business Law Journal highlights his expertise across banking and finance, capital markets, corporate and M&A, competition law and institutional support in Vietnam. LinkedIn

Upcoming event | LPA Hong Kong will host a conference on the taxation of French Nationals living abroad on 25 March in Hong Kong. Organised in partnership with UFE Hong Kong & Macao, the event will address cross-border tax residency issues, international investment considerations, estate planning and key aspects to anticipate when returning to France, with insights from Nicolas Vanderchmitt, Managing Partner, and Marie-Gabrielle du Bourblanc, Counsel. Information and registration click here

Past event | Lionel Vincent, Managing Partner of LPA Tokyo, hosted a conference at LPA Law Paris office welcoming Akihito Uesada, Mayor of Matsue city in Japan. The event highlighted Matsue’s business environment and investment opportunities. It also marked the long-standing relationship between LPA Tokyo and Matsue City. LinkedIn

Past event | Antoine Logeay, Partner at APFL Partners, delivered a guest lecture at British University Vietnam on hospitality and tourism law in Vietnam. The session addressed key legal trends shaping the hospitality and tourism sectors in Vietnam, including hotel management agreements and their practical implications for owners, operators and investors. LinkedIn