25 May 2023
Stricter anti-money laundering (AML) measures for the crypto sector in Japan will enter into force next month, local media reported. The new rules were adopted to align the country’s legal framework for cryptocurrencies with global standards in the field.
The Cabinet of Japan, the executive power in Tokyo, has decided to enforce more stringent AML rules for cryptocurrency operations from June 1, the Kyodo News agency reported. The measures will bring the nation’s regulatory framework in line with international standards and allow the government to trace digital-asset transactions.
Japanese lawmakers amended the respective laws in December 2022, in response to recommendations by the Financial Action Task Force (FATF), the intergovernmental organization developing policies designed to combat money laundering and terrorism financing.
The FATF had evaluated Japan’s previous AML procedures as insufficient. Besides the legislative revisions, the country’s oversight bodies have been strengthening their monitoring of crypto assets that can potentially be used to launder illicit funds.
One of the mechanisms that should allow authorities in Japan to better track the movement of digital money is the so-called ‘travel rule.’ It requires service providers to identify both the sender and receiver of a crypto transfer, with this information “traveling” with each transaction.
Besides cryptocurrencies like bitcoin, the updated regulations also cover stablecoins pegged to fiat currencies like the U.S. dollar or various commodities, the report notes. Entities failing to comply with corrective orders issued by Japanese regulators will face criminal prosecution.
The news from Tokyo comes after the recent summit in Hiroshima of the Group of Seven (G7) developed economies, of which Japan is a member. In an article published ahead of the meeting, the FATF President T. Raja Kumar urged the G7 nations to bring an “end to the lawless crypto space.” Citing FATF requirements, Pakistan recently announced its intentions to ban online crypto services.
Do you expect other countries to enforce stricter crypto regulations to comply with the FATF standards? Tell us in the comments section below.
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