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  5. Spoof Patrol: Demonstration plan under the Regulatory Sandbox Scheme approved for preventing unauthorized opening of internet bank accounts

Spoof Patrol: Demonstration plan under the Regulatory Sandbox Scheme approved for preventing unauthorized opening of internet bank accounts

March 6, 2019

The Ministry of Economy, Trade and Industry (METI) approved a plan for a demonstration project involving utilization of information on electricity facilities in services for detecting unauthorized opening of internet bank accounts, which will be jointly implemented by Caulis Inc. and Kansai Electric Power Company, Incorporated (KEPCO). This is the second approval by METI under the Regulatory Sandbox Scheme.

1. Company Utilization of the Scheme for Demonstration of New Technologies (Regulatory Sandbox Scheme)

Under the Act of Special Measures for Productivity Improvement, which entered into force on June 6, 2018, the Scheme for Demonstration of New Technologies (the so-called “Regulatory Sandbox Scheme”), was established to encourage companies to promote business activities taking advantage of new technologies and business models. As one of the efforts for promoting regulatory reforms, this scheme aims to encourage companies to: promptly develop environments in which companies are able to conduct demonstrations of new technologies and business models by limiting participants in the target demonstration or the test period without being restricted by existing regulations; and to make use of information and insight gained from such demonstrations.

Under this scheme, a person who intends to embark on a demonstration of new technologies should prepare a Demonstration Plan of New Technologies (hereinafter referred to as the “plan”) and submit the plan to the competent ministers (the minister with jurisdiction over the businesses developing new technologies, etc. and the minister with jurisdiction over the regulations). In response to receiving the plan, the competent ministers should determine whether or not they approve the plan after they take into consideration the opinions of the Innovative Technology/Business-model Evaluation Committee. As for the plan that Caulis Inc. and KEPCO have submitted, the METI Minister serves as the minister with jurisdiction over the businesses developing new technologies, etc., while the Personal Information Protection Commission and the METI Minister serve as the minister with jurisdiction over the regulations.

2. Outline of the companies’ plan and approval thereof

The plan submitted by Caulis Inc. and KEPCO aims to demonstrate their project, an effort under the Act on Prevention of Transfer of Criminal Proceeds, in which Caulis makes use of the information on electricity facilities that KEPCO has for the provision of Caulis’ existing services for detecting unauthorized opening of bank accounts by customers so that Caulis is able to judge whether or not details of an online request for opening a new bank account that a bank has received from a customer are appropriate and is also able to examine the effectiveness of this effort.

METI approved the plan since the plan is considered to satisfy the requirements for approval under the provisions of Article 11 (4) of the Act of Special Measures for Productivity Improvement. For details of the approval, see the Appendix.

This demonstration is expected to contribute to promoting the establishment of a new business model: collaboration between information owned by companies providing public services, e.g., electricity companies, and IT technologies has a potential to address social challenges.

For more information on the Act on the Protection of Personal Information, contact the Personal Information Protection Commission.

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