The Diet passed a bill Friday to set up a system that will assign an identification number to every citizen to improve government management of income, social security and tax information despite public concerns about the potential for data abuse.
The House of Councilors voted for the bill, which was approved by the House of Representatives earlier this month.
The system, to be introduced in January 2016, will assign a "my number" to each citizen starting around fall 2015 to integrate all of their financial information. This is expected to help public offices collect information more accurately and make it easier to distribute welfare benefits and tax credits to citizens.
Individual ID numbers will be assigned to foreign residents as well, except for short-term visitors.
The government's current benefit distribution process currently requires people to jump through complex hoops and submit a variety of documents to separate offices.
The new system is expected to help tax authorities more easily detect cheats while allowing financial institutions to identify people even if they have lost all of their personal belongings in a natural disaster.
People will be able to apply for their own ID cards bearing the assigned number and other personal information after being notified of what their number is.
To prevent the system from being abused, the bill stipulates setting up a third-party organization to look into allegations of data mishandling by public offices, with a maximum penalty of four years in prison or a ¥2 million fine set for those who leak or sell information.