Japanese

Provisional Translation

[Opening remarks:]

Minister)

I would like to address our response to unauthorized FX transactions related to GMO Internet. My understanding is that this incident involved some customers who used automated trading tools and the like for FX trading and had contracted with GMO Internet for server hosting services, and that user information on those servers was viewed without authorization, and transactions that the customers did not recognize were conducted through FX brokers. GMO Internet is a server hosting provider and does not fall under the Financial Services Agency’s jurisdiction. Nevertheless, last Thursday, the FSA requested, through the Financial Futures Association of Japan, that all FX brokers take the necessary action in connection with this incident. Specifically, this included alerting customers to the need to change their passwords and check for transactions they did not recognize, as well as strengthening the monitoring of customer transactions. As of today, five FX brokers, Goldenway Japan Co., Ltd., OANDA Japan Inc., Ava Trade Japan K.K., Gaitame Finest Company Limited, and Dukascopy Japan K.K., have reported customer harm believed to be related to GMO Internet. I understand that an announcement has been made that GMO Internet will compensate customers for losses from these unauthorized transactions. I have been informed that the five brokers have already obtained information on users of GMO Internet’s server hosting services and that, based on this information, they are taking measures to prevent further harm, including temporarily suspending FX trading by the customers concerned as a precautionary measure, blocking unauthorized orders originating overseas that are believed to have been placed by attackers, and resetting the passwords of the customers concerned. We have not received any reports of new unauthorized transactions at present, but the FSA will remain vigilant in its response.

[Questions and answers:]

Q.

As you have just explained, unauthorized access and cyberattacks targeting companies have led to leaks of personal information, and customers have suffered harm from unintended trades in automated FX trading, as well as at securities companies. A Ministerial Meeting on Cybersecurity was also held yesterday evening. Could you explain how the Ministry of Finance and the FSA intend to respond going forward, including the measures currently being taken?

A.

As I have just mentioned, there have been incidents involving leaks of financial institutions’ customer information and unauthorized transactions exploiting that information, among others. We therefore recognize this as a matter of great importance from the standpoint of protecting users and are responding accordingly. Since April this year, there have been numerous press briefings for you on this matter, and we have remained on alert ever since the emergence of Mythos. We have established a forum that meets regularly to strengthen public-private cooperation among the financial industry, the IT industry, the government, the Bank of Japan, and others. In May, we also requested that financial institutions and other relevant entities take short-term measures, and we have continued to encourage further action. Furthermore, in light of recent incidents, we have issued alerts calling for identity verification by reading information stored in IC chips, which is considered highly effective in preventing fraud. We have also requested that FX brokers issue alerts concerning password changes and other matters and strengthen the monitoring of customer transactions. I believe we may be managing to prevent further harm. On the international front, at the recent G7 meeting in Bangkok, it was agreed that a tabletop exercise would be conducted next year. This is intended to enable an appropriate response among G7 members even in the event of a cross-border cyber incident arising from frontier AI. In other words, this sense of urgency is shared internationally. In addition, the Ministerial Meeting on Cybersecurity was held yesterday. As a member in my capacity as Minister of Finance and Minister of State for Financial Services, I made these points at the meeting. The Prime Minister instructed us to compile a package of emergency measures with the aim of completing it by the end of next week, and the FSA is urgently considering the necessary measures. We will continue to work closely with the NCO and other relevant agencies. Incidents and circumstances evolve very rapidly, so we intend to make timely requests to financial institutions and other relevant entities to take appropriate and prompt action as each situation develops.

Q.

Approximately how many transactions are involved at the five FX brokers you just mentioned, and what is the value of those transactions?

A.

It appears that this information has not been made public.

Q.

What about cases involving overseas brokers?

A.

Our authority extends only to brokers registered in Japan, so that is the scope we have covered for now.