APPI Japan Data Protection: How to Comply?

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March 23, 2024 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.

Key Takeaways

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?

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What is Japan’s APPI.jpg

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.

In 2024, significant updates and changes have been made to Japan’s Act on the Protection of Personal Information (APPI), which Data Protection Officers should be aware of. These updates are crucial for organizations operating within or in relation to Japan, as they impact how personal information is handled, reported, and protected.

1. Expansion of Extraterritorial Application: The APPI’s amendments have expanded its reach to foreign business operators that handle personal information related to the supply of goods or services to individuals in Japan. This change means that more foreign companies may now be subject to APPI regulations, including the need to comply with reporting requirements and possibly receiving orders from Japan’s Personal Information Protection Commission (PPC).

2. Mandatory Reporting of Data Breaches: There’s now a requirement for businesses to report data breaches to the PPC and notify affected individuals. This requirement is especially stringent for breaches involving sensitive personal information, significant risks of property damage, suspected cyberattacks, or those affecting more than 1,000 data subjects.

3. Amendment to the Telecommunications Business Act: In June 2023, amendments to the Telecommunications Business Act took effect, imposing new obligations on large-scale telecommunications service providers. These include establishing and submitting information protection procedures to the Ministry of Internal Affairs and Communications (MIC), disclosing information protection policies, appointing an information protection officer, and reporting certain data breaches to the MIC.

4. Key Definitions and Regulatory Focus: The APPI provides detailed definitions relevant to personal data, including what constitutes personal information, sensitive personal data, pseudonymized information, and more. This includes a new focus on “person-related information,” which applies to data like cookies, IP addresses, and device IDs collected without user logins. This regulation aims to ensure user consent for cookies or the sharing of such information.

5. Enhanced Regulations on Data Provision and Cross-Border Transfers: The amendments have introduced stricter rules regarding the provision of personal data to third parties and cross-border data transfers. This includes ensuring that the recipient has the consent of the data subjects when transferring their data as personal data. Providers must also keep records of such data transfers, indicating a significant step towards ensuring accountability and transparency in data handling.

These updates reflect Japan’s commitment to enhancing personal data protection and aligning with global standards. For organizations, compliance requires a thorough understanding of these changes and proactive measures to ensure that data handling practices are fully compliant with the new regulations.

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

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What Rights Do Consumers Have Under Japan's APPI.jpg

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

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APPI Japan Data Protection Checklist.jpg

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.

Maintain a comprehensive privacy policy

Though the APPI doesn’t explicitly require a privacy policy, its disclosure obligations can be satisfied by having a publicly accessible privacy policy.

A well-crafted privacy policy is the foundation for your business’s data protection practices.

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.

Remember to regularly review and update your privacy policy to reflect changes in your data processing practices.

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:

Race

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.

In light of this, you’ll need an efficient system to honor DSARs promptly. Captain Compliance — a top-tier compliance solution — can help with this.

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.

Final Thoughts

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!

FAQs

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.

Find out how various privacy laws differ from our GDPR vs CCPA vs LGPD article

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).

Learn more about cross-border data transfers in our comprehensive guide

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

Find out more in our article: Japan APPI vs. GDPR

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

Learn how to protect your business and customers with data privacy services

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