APPI Japan Data Protection: How to Comply?
Do you do business in Japan or handle the data of Japanese citizens? If so, you must understand Japan’s APPI (Act on the Protection of Personal Information) and what it means for your business.
Unlike most privacy laws today, Japan's APPI has existed since 2003, making it one of the first data protection laws in Asia. Over the years, the APPI has been updated a few times to keep up with today's technologically advanced society.
This article breaks down the key aspects of the APPI to help streamline your compliance efforts. We'll examine whether the law affects you, what you must do to comply, the penalties for non-compliance, and more.
Let's get into it.
- Japan's APPI is the country's federal data privacy law. It grants Japan's citizens several rights over their personal information and requires businesses to uphold specific privacy and ethical standards.
- If your business handles the personal information of people in Japan, APPI compliance is a must. Your obligations include (but aren’t limited to) getting valid consent when needed, reporting data breaches promptly, and implementing safeguards for cross-border data transfers.
- Non-compliance with Japan's APPI attracts fines of up to ¥1 million ($7,000) for individuals and ¥100 million ($700,000) for businesses. Violators may also face civil lawsuits and criminal charges.
What is Japan’s APPI?
Japan's APPI is the nation's comprehensive data protection law. It was designed to protect Japanaese consumer’ privacy by regulating how businesses handle personal information in Japan's data-driven economy.
Note: The APPI refers to a business under its scope as a “Personal Information Controller” or PIC.
Since its introduction in 2003, the APPI has been revised a few times with significant updates in 2016 and 2020.
Through these revisions, Japan's APPI has tackled three main issues:
- Addressed threats posed by several high-profile data breaches in 2015
- Brought the APPI up to speed with the evolving technological landscape
- Established the Personal Information Protection Commission (PPC) to oversee and enforce APPI compliance
Thanks to the APPI, consumers now have new rights and better protections for their personal information. On the flip side, businesses must comply with several data protection requirements to protect consumers and operate responsibly in the Land of the Rising Sun.
The APPI notably shares many similarities with the world-renowned GDPR, making compliance easier for businesses subject to both laws. That said, the APPI differs from the GDPR in several important areas that merit attention.
Who Must Comply with Japan's APPI?
Much like the GDPR, Japan’s APPI has an extraterritorial reach.
In other words, whether you're based in the heart of Tokyo or halfway across the globe, the APPI applies if you handle the personal information of Japanese citizens for commercial purposes.
Note that the term 'handling' is identical to the GDPR's 'processing.' It means just about anything you can do with data, including collecting, storing, using, sharing, deleting, etc.
Exemptions Under Japan’s APPI
Like most data privacy laws, Japan’s APPI points out specific groups and data types that are exempt from all (or most) of its requirements.
Briefly, APPI exemptions are as follows:
- Federal and local governmental organizations
- Academic institutions, religious bodies, and political parties
- Anonymous information (i.e., irreversibly stripped of all identifiers)
- Broadcasting institutions, newspaper publishers, professional writers, journalists, and other press-related entities
While these exemptions offer some flexibility, it's important to carefully consider your specific circumstances and data operations before relying on an exemption.
What Rights Do Consumers Have Under Japan's APPI
As noted, Japan's APPI empowers data subjects with several rights over their personal information. The implication? Businesses must set up systems to help exercise consumer rights upon request (and where practical).
Let's take a look.
Right to access/disclosure
Under the APPI, consumers can request access to their personal information in either digital or hardcopy format — and without unreasonable delay.
Specifically, consumers have the right to know what data types you have about them, how you plan to use it, and which third parties you’ve shared it with. If your business fails to respond to this request within two weeks, consumers have the right to sue.
Right to correction
The APPI gives data subjects the right to request corrections to their inaccurate, incomplete, or outdated personal information.
Right to deletion
Data subjects can also ask you to erase their personal information under certain circumstances, such as when the data is no longer necessary for pre-established purposes. In cases where you can’t comply with the right to delete (because of a contradicting law, for example), you must let consumers know the reasons.
Right to suspension
Under Japan’s APPI, consumers can suspend you from using or disclosing their personal information if they believe it was fraudulently obtained or handled unlawfully. This right gives data subjects a direct say in how their data is used, adding an extra layer of control.
APPI Japan Data Protection Checklist
Japan’s APPI data protection requirements are pretty complex — with as many intricacies as the GDPR.
For this reason, the PPC has issued general guidelines to help businesses make sense of the law. Despite this, APPI compliance often remains a head-scratching endeavor.
And that’s why we've compiled the most important compliance aspects into a helpful checklist below. Let’s take a look.
Specify and adhere to a purpose of use
Before handling personal information, the APPI requires you to clearly define the specific reason for using that information ("purpose of use"). You must then communicate this purpose to data subjects, and you cannot change it without their explicit consent.
Still, within this requirement, you must only use personal information to the extent necessary to achieve your defined purpose of use. Once this purpose is fulfilled, you must promptly delete the personal information from your records.
It clearly outlines your commitment to data privacy, the specific purposes for which you collect and use personal information, and the measures you have taken to comply with APPI.
Obtain consent for specific activities
While the APPI doesn’t require consent for all data collection activities, it does require consent in some instances.
First, if you plan to use personal information beyond the purposes for which you collected it, you must get explicit consent from the data subject.
Similarly, the APPI requires explicit consent before handling “special care-required information” — a distinct class of personal information that, if exposed, could lead to bias and discrimination.
Special care-required information is identical to sensitive personal information. Under Japan’s APPI, it includes but isn't limited to:
- Social status
- Credit history
- Medical history
- Criminal records
- Religious beliefs
Notify promptly about data breaches
Data breaches pose a significant risk to people's privacy, and the APPI echoes this sentiment. Although not as strict as the GDPR in terms of data breaches, it does have some rules to follow.
Under the law, if your business suffers a data breach that affects many people or includes sensitive data, you must alert the affected data subjects without delay.
You must also notify the PPC if the breach includes any of the following:
- Special care-required information
- Malicious intent (e.g., ransomware)
- At least 1,000 consumers’ personal information
- Financial details that could cause major economic losses
To help things along, the PPC has released an online form to submit breach notifications. Importantly, your notification must outline every relevant detail about the breach, including the nature of the compromised data and the steps you’ve taken (or will take) to lessen the impact.
Implement adequate security measures
Protecting personal information from unauthorized access, breaches, loss, alteration, and leakage is paramount under Japan’s law.
To achieve this, the APPI requires you to set up appropriate physical, technical, and organizational security measures to shield personal information.
Practically speaking, this would involve having safeguards like:
- Data encryption
- Access controls
- Regular cybersecurity audits
- Crisis management action plans
- Data loss prevention mechanisms
- Privacy awareness training for employees
Establish processes for handling data subject requests
As noted, the APPI grants Japanese data subjects several rights over their personal information — subject to certain conditions. The exercise of these rights is generally referred to as a Data Subject Access Request (DSAR).
In practice, you’ll need to give people copies of their personal data, correct errors once pointed out, suspend data processing in specific cases, and completely erase data when appropriate.
Observe cross-border data transfer requirements
Before transferring personal information (including special care-required information) to countries outside Japan, the APPI requires one of the following to be true:
- The receiving country’s personal information protection system is similar to Japan’s
- Appropriate contracts have been signed with the receiving parties
- You’ve obtained express opt-in consent from data subjects
Note: Consent isn’t required if the data transfer is within the public interest. This includes cases that involve legal matters, public health concerns, or national security.
It’s also worth noting that Japan's data protection standards have been recognized as adequate under EU law, allowing seamless cross-border data transfers between Japan and the EU.
For more information on cross-border requirements, check the APPI’s Guidelines for off-shore data transfers.
Penalties for Non-Compliance with APPI Japan Data Protection?
The PPC sets out separate penalties for individuals and businesses who fail to comply with Japan’s APPI.
For individuals, non-compliance attracts fines reaching ¥1 million (roughly $7,000) and a potential one-year imprisonment. In contrast, businesses risk much higher fines of up to ¥100 million (roughly $700,000).
Keep in mind that the actual fines depend on the gravity of offenses and the unique circumstances of a case. The good news is that the PPC often allows non-compliant businesses to correct their mistakes before resorting to enforcement actions and penalties.
That said, APPI compliance shouldn’t just be about avoiding penalties; it should be about acting responsibly and building trust with your customers in a privacy-centric society.
By now, you’re likely convinced that APPI compliance requires specialized knowledge for effective results. In other words, trying to become compliant without outsourcing to a dedicated service can prove challenging and inefficient in the long run.
So, why not leave compliance to the experts?
This is our specialty at Captain Compliance. With our team of professionals, software, and tools, we're committed to helping you navigate these regulatory waters to achieve compliance excellence.
From crafting robust privacy and cybersecurity policies to optimizing your data subject request processes, we've got your back.
Your business deserves ironclad protection, and we're here to deliver! Ready to achieve APPI compliance success? Get in touch today!
Can Japan's APPI apply to small businesses overseas?
The APPI applies to all businesses — regardless of size or location — that handle the personal information of Japanese citizens. This includes businesses that operate in Japan and those that collect personal information from its citizens to provide goods or services.
Does Japan's APPI require explicit consent for all data processing?
No, the APPI doesn't require consent for general data collection. However, explicit consent becomes necessary when you expand data usage beyond your purpose of use, handle special care-required information, or transfer data overseas (in some cases).
How does Japan’s APPI differ from Europe’s GDPR?
The APPI and GDPR are both comprehensive data protection laws designed to protect the digital privacy and personal data of their respective citizens.
That said, their provisions differ in many significant areas. Just some of these differences include:
- Territorial scope of application
- Data breach notification specifics
- Consumer rights over their information
- Different rules for when consent is needed
What measures should I take to protect data under the APPI?
To protect personal information under the APPI, you’ll need appropriate technical, organizational, and physical security measures.
In practice, these measures may include:
- Privacy awareness training for your employees
- Data loss prevention mechanisms to prevent accidents
- Access controls to restrict data access to authorized staff
- Regular security audits to pinpoint and address vulnerabilities
- Encryption to safeguard personal information at rest and in transit