Bank Account

Guide for the Opening Corporate Bank Accounts in Japan

The purpose of this guide is to provide an overview of procedures for opening corporate bank accounts, and to assist you with structuring the best banking management practices from outside of Japan. The guide’s focus is for the banking needs of small- to mid-size Japanese subsidiaries of international companies.
Due to changes in FACTA, and other regulations to prevent money-laundering, banks are changing the criteria for opening bank accounts, especially for international companies. Once you have selected a few banks, you will need to confirm the account features with the bank via your local director.

01 Difficulty of Opening a Bank Account

We have seen many Japanese subsidiaries of international companies to struggle with opening a bank account because local banks worry about the credibility of the Japanese subsidiary. It is important to know that Japanese banks only allow companies with a high level of credibility to open bank accounts. Credibility is generally built through meeting the following conditions:

・Existence of local director who the bank can trust based on his credit history
・Existence of physical office
・The Representative Director is a resident of Japan
・Business type of KK or GK
・Existence of a local phone number
・Shareholder’s company size and business type
・Compliance with FATCA regulations

Since April 2016, changes in corporate law have allowed a company to be established with a non-Japan resident serving as the Representative Director. However, Japanese banks generally only approve applications from a companies with a Representative Director who lives in Japan. Below is a summary of the difficulty in opening a bank account by the type of company:

Type Difficulty
1) Branch office Very difficult
2) KK/GK without local director Very difficult
3) KK/GK with a local director
(Representative Director – Japan resident)
4) KK/GK with local director
(Representative Director – non-Japan resident)

If the parent company is well-known, such as one included in the Fortune 500, documentation showing that the new entity is a subsidiary of a listed corporation is helpful for gaining approval for a bank account. Whether or not you are able to open a bank account depends on the decision of the head of bank’s branch office. One branch of major bank may accept the application while another branch rejects it. It is not easy for small private companies to open bank accounts if there is no local director. In such case, we often see companies hire a nominee director, although there are very few candidates who accept that kind of position.

02 Procedures of Opening Bank Accounts

Once the credibility has been established, the Local Director needs to visit the bank to apply for the opening of a bank account. Below are the usual required items for bank account applications:

-A copy of company registration certificate
-Bank seal (to be registered at the bank)
-Driver’s license of the Representative Director
-Parent company information
-Application form for opening a bank account
-Application form for online banking
-Confirmation letter for FACTA compliance for US corporations

It generally takes two weeks to complete the process of opening a bank account. Passbooks and cash cards will be delivered to company’s office address by registered mail.

03 Online Banking

Many of our international clients are willing to control online banking accounts from outside of Japan. However, most of our clients failed to get access to the online banking system due to the following reasons:

-User interface is only Japanese (While some banks offer an English version of online banking, it is still challenging for non-Japanese speakers to manage bank accounts because many of the transaction details are only shown in Japanese)
-Banks do not allow users to use the online banking systems from outside of Japan.
-Time difference (online banking systems generally work for certain transactions from 8am to 6pm Japan time)
-Call center support is available only in Japanese and does not help users outside of Japan.
-Setup of online banking requires Internet Explorer’s Japanese version

Given the restrictions to access online banking systems from other countries, there are three type of banking management options for small-size Japanese subsidiaries:

1) Outsource banking management to 3rd party accounting firm
2) Hire in-house accountant and to process banking transactions
3) Assign the local director to manage banking transactions

If you are worried about fraudulent transactions from your company’s Japan bank account, you can keep the minimum amount of money in the Japan account, and wire money based on requests from the Japanese subsidiary. By doing this, you will reduce the risk of losing money through unauthorized transactions.

04 Features of Online Banking Systems

The available functions vary depending on the banks, but below are helpful functions which are typically offered by the Big 3 banks in Japan.

-Payment to 3rd party vendors
-Payroll payment
-Payment of corporate taxes and consumption taxes (via PayEasy)
-Automated withdrawal (Social Insurance Premium)
-Payment of inhabitant’s taxes
-International wire transfers (A special application is required to make this function available)

To activate all payment services, you need to upgrade to the standard service from light version, which costs roughly $50 per month. Most invoices can be processed with online baking, the only major exception is labor insurance premium payments, which requires you to visit the bank in-person to process the payment.

05 Role of Passbook and Bank Seal

It is important to know the differences of Japan’s banking system, which is significantly different from many countries. Japanese bank seals and passbooks play important roles in banking transactions. If you would like to withdraw money and make payments from your bank account, you need to bring 1) corporate seal and 2) passbook to your bank branch, so the bank tellers can process the payment. Also, unlike many western countries, a signature is not registered to give authority to execute banking transactions. Instead, a bank seal impression is registered for all banking transaction. This makes storing passbooks and bank seals in a secure place critically important to protect against fraudulent withdrawals. In addition, checks are rarely issued in Japan. There are three ways to withdraw money from your bank account as follows:

1) Payment to another account through the online banking system
2) Withdraw from a bank teller at a bank’s branch office
3) Withdraw by ATM with a cash card

06 Customer Support

Customer support is only available in Japanese, and without a local director or 3rd party accounting firm who assist banking transactions, it is very hard to communicate with Japanese bank staff. Generally, bankers are not assigned to individual clients, so you will not be able to directly reach the right person from outside of Japan. To settle the transaction issues, you need to visit the branch office of your bank in person.

07 Recommended Choice of Japanese Banks

Credibility is very important for building relationships with local customers and partners in Japan. This unique point should be considered in the selection of your bank. If your subsidiary’s bank account is outside of the major Japanese banks, your customer may see this as a sign that you did not meet the credibility requirements of the major banks, and in turn doubt your company’s credibility. We generally recommend that you try for one of 3 mega banks first.

(Big-3 Mega Banks)
There are no significant differences among the three major banks in terms of services and fee structures.
-Mizuho Bank
-SMBC (Sumitomo Mitsui Banking Corporation)
-MUFJ (The Bank of Tokyo-Mitsubishi)

(Tier 2 Regional Banks)
There are more than 100 regional banks, but these banks’ limited number of branches make them inconvenient if you are not located near one of their offices. If a regional bank is located near your office, it may be good choice to open bank account there. The regional banks generally offer the same banking services as the Big-3 banks.

(Online-Focused Banking)
In general, these banks offer lower charges than the Big-3 banks but do not offer tax payment services.
-Rakuten Bank
-Japan Net Bank
-SumishinSBI Netbank