Japan Gears Up To Enforce AML Measures For Crypto
Japan has announced the implementation of new anti-money laundering (AML) measures for cryptocurrencies to combat increasing fraudulent activities in the industry.
Japan Revises AML Measures, Tightens Crypto Regulation
In an effort to combat the rise in crypto-related crimes and ensure the integrity of its financial system, Japan will be enforcing strict anti-money laundering (AML) measures across the countrys crypto industry. These measures, which were first proposed earlier this year, are set to take effect from June 1st.
There has been an ever-increasing rate of illicit activities like money laundering and terrorism financing, especially in crypto. With Japan being such a significant player in the global cryptocurrency market, the countrys cabinet is seeking to address potential risks associated with the anonymity and decentralized nature of digital assets.
The country‘s existing legal framework has come under criticism by the international financial watchdog, Financial Action Task Force (FATF). As a result, the country’s cabinet revised the relevant laws in December, focusing on monitoring the movement of illicit funds under the guise of legal crypto transactions.
New Measures Include “Travel Rule”
The enforcement of the “Travel Rule” is a significant aspect of the new measures aimed at ensuring more precise monitoring of illicit proceeds. The proposal of the rule was extensively deliberated at the G7 meeting held recently in Japan and has received unequivocal support from the G7 committee.
Under the Travel Rule, any financial institution processing cryptocurrency transfers exceeding $3,000 must share customer information with the recipient exchange or institution. This information comprises the sender and recipient's names, addresses, and account details.
FATF President T. Raja Kumar had addressed the G7 leaders prior to the summit, saying
“G7 countries should lead by example and regulate the crypto sector so that no safe havens exist for illicit crypto transactions.”FSA Japan In Charge Of New Measures
The new framework will also include measures to implement robust know-your-customer (KYC) procedures, closely mimicking those of traditional financial institutions. Furthermore, crypto exchanges registered in Japan will also need to verify customer identity and maintain detailed transaction records that are in line with AML standards.
Japan's Financial Services Agency (FSA) has been entrusted with the responsibility of establishing compliance with the new framework by regular audits checking the efficacy of the AML measures. The FSA will also be taking action in non-compliance cases, using methods of official warnings, corrective measures, penalties, potential suspension, or even revocation of operating licenses.
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