What is Financial Services Agency?
Financial Services Agency, or FSA, is a Japanese government entity responsible for overseeing banking, insurance, and securities and exchange.
The role of the Financial Services Agency is to ensure the stability of Japan's financial system; the protection of depositors, insurance policyholders, and securities investors. It is in charge of the inspection, supervision, and transparency of the financial system through the Securities and Exchange Surveillance Commission. It also oversees the country's Certified Public Accountants and Auditing Oversight Board.
FSA was established 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, became an external entity of the Cabinet Office. It has a commissioner and reports its activities to the country's Minister of State for Financial Services.
The FSA handles planning and policymaking regarding Japan's financial system; supervision of private sector financial institutions; development of rules for trading in markets; development of business accounting standards; supervision of CPAs and auditing firms; compliance of rules in financial markets and more.
An Example of Financial Services Agencies in Action
As part of its oversight of the country's financial activities, Japan's Financial Services Agency has recently been taking a close look at cryptocurrency exchanges.
In April 2018 it was reported in Forbes that, in a bid to help prevent money laundering and stem criminal activity on the dark web, FSA was pressuring these exchanges to stop handling certain cryptocurrencies that are particularly favored by cybercriminals and computer hackers.
FSA was reportedly taking "all available steps to discourage the use of certain alternative virtual currencies that have become attractive to the underworld because they are difficult to track," according to the Forbes article.
In certain cases, the agency even ordered specific cryptocurrency exchanges to shut down. In early April 2018, FSA demanded that two exchanges to cease operations for a matter of months as it worked to shore up regulation following the hacking theft of some ¥58 billion, more than $532 million, at Tokyo crypto exchange Coincheck.
FSA had previously instituted a licensing requirement for Japan's cryptocurrency exchanges. After the hacking incident, the agency ordered Coincheck to investigate the theft and required it to submit a written report with plans to prevent recurrence.