Japanese Regulator Checks Crypto Exchanges AML Policies


Japanese Financial Services Agency (FSA) has taken the initiative and started checking crypto exchanges that offer anonymous transactions or have weak identity verification practices. The local publications report that authority checks crypto exchanges AML policies in preparation for inspection by the Financial Action Task Force (FATF).

The article was updated on 25 November, 2019 by Amicus.

23 May, 2019, | AtoZ MarketsAlmost five months ago, the Japanese regulator was considering the issue of regulating the activities of unregistered firms. That attracts investments in cryptocurrency. Back then, different media resources suggested that the main factor that boosted FSA activity was criminal events involving crypto.

By that time, Tokyo police had arrested eight people suspected of using the pyramid scheme to collect 7.8 billion yen. That was both in cash and cryptocurrency, from about 6000 investors in 44 prefectures, including Tokyo. The suspects were supposed to take a lot of investment in digital assets. That was rather than cash in an attempt to avoid regulating their unauthorized transactions.

FSA Tightens Crypto Regulations to Protect Investors

In January 2019, the Japanese regulator took steps to clarify remaining ambiguities regarding cryptocurrency regulation, including placing cryptocurrency in a new legal category. It stated, “hope that traders will no longer buy them, believing that they are legal tender” recognized by the government.

The FSA also intended to introduce ICO rules to protect investors from fraud. Unlike China and South Korea, the Country of the Rising Suna has not declared banned ICOs.

In January, the Japanese FSA revealed that there are currently seven pending applications for crypto exchange licenses in the country. In April 2019, the Japanese authority released another statement. That outlined the importance of new regulations about the cold wallets for the storage of cryptocurrencies for cryptocurrency exchanges.

FATF Purpose in a Brief

The Financial Action Task Force (FATF) is an inter-governmental authority. Its objectives are to set standards and promote effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, etc.

The local media reports that the agency will send its investigative unit to test the effectiveness of the AMS Japan Anti-Money Laundering Policy (AML). That includes a policy on crypto-exchange and other financial services.  According to the 2008 FATF report, Japan received the worst possible score for verifying identity with financial institutions.

Japanese Regulator Improves Regulations and AML Policies

In 2018 FSA issued business improvement orders to practices that did not take appropriate AML measures. Also, according to the report, Japan was the first country to introduce a registration system for cryptocurrency exchange. However, in October, the FATF made changes to its rules by including crypto exchanges in its AML policies.

Also, the authority appealed to the G-7 member states to begin implementing strategies for registering, licensing, and monitoring crypto exchanges. In addition to all, in July last year, the FSA underwent a severe restructuring. That was for better meeting the challenges of regulating Fintech technologies and cryptocurrencies.

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