Stricter anti-money laundering (AML) measures will be imposed in Japan starting from June 1, targeting cryptocurrency transactions. The decision came after the Financial Action Task Force (FATF), an international financial watchdog, criticized Japan’s previous AML efforts as insufficient. The new laws, enacted in December, aim to enhance surveillance of crypto assets that have become increasingly susceptible to money laundering. Illicitly obtained funds can be disguised as legitimate by processing them through legal cryptocurrency transactions.
Introduction of the “Travel Rule” for Cryptocurrency Transfers
One prominent feature of the new framework is the introduction of the “travel rule” to strengthen the tracking of criminal proceeds. Under this rule, financial institutions involved in cryptocurrency transfers must transmit customer information, including the names and addresses of both the sender and recipient, to the subsequent institution. The focus of the crackdown will be on stablecoins and cryptocurrencies pegged to major currencies like the US dollar or commodities. Failure to comply with corrective orders may result in severe criminal penalties. The Financial Services Agency (FSA) in Japan plans to lift the ban on foreign-issued stablecoins in 2023. The revised stablecoin act aims to regulate all virtual currencies and restrict their issuance exclusively to banks and fund transfer companies that can provide collateral assets. The proposed regulations seek to enable domestic entities to engage in foreign stablecoin transactions while adhering to existing guidelines for asset management and AML measures. In 2019, the FSA introduced comprehensive guidelines for issuing and managing stablecoins, defining them as cryptocurrencies pegged to fiat currency or other assets. Japan has been at the forefront of embracing cryptocurrencies and has made significant progress in this rapidly evolving industry. As early as 2017, the country recognized Bitcoin as a form of payment, demonstrating its proactive approach to digital currencies. Japanese consumers have shown resilience during market upheavals, such as the collapse of FTX, indicating their understanding of risks and ability to navigate volatile conditions.
The government’s commitment to investing in Web3 services, NFTs, and the metaverse highlights its comprehensive digital transformation efforts. Furthermore, Japan is exploring the issuance of a central bank digital currency (CBDC) through a pilot program, positioning itself in the global race for secure and efficient digital payment systems.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments. This is a news article only.
