Japan’s crypto rule now targets money laundering concerns
The Japanese government should introduce regulations targeting criminals who use crypto from crypto exchanges to launder money. According to reports, these remittance rules will be introduced by next spring.
The Act on the Prevention of the Transfer of Criminal Burdens is to be revised so that it is mandatory to share customer information between operators of cryptocurrency exchanges.
This is intended to trace money transfers to people engaged in illegal activities.
The rule involving the sharing of customer information requires the sharing of customer information that includes customers’ names and even addresses when there are crypto transfers between platforms.
This draft amendment to the law must be submitted to the extraordinary dietary meeting which will take place on 3 October.
This bill is intended to add crypto to the money transfer rules, which are known as the travel rules. It comes into force in May next year.
The Financial Action Task Force (FATF) is an international organization that looks at measures against money laundering. In 2019, the FATF recommended that the countries adopt this rule.
This law will apply to Stablecoins which are a form of crypto
This law will apply to stablecoins, a type of cryptocurrency that is linked to a fiat currency or legal tender. The distribution of stablecoins is connected to a registration system, which will be delivered next spring.
This will happen when the revised Fund Settlement Act is adopted during this year’s ordinary session of the Diet and comes into force.
The use of cryptocurrencies in Japan has become widespread in recent times. This is why the government plans to introduce a wider surveillance system for cryptocurrencies.
The cash transactions that occur between banks are also recorded and tracked by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) when international money transfers take place.
It is also tracked by the Japanese Banking Association’s Zengin system for domestic remittances, and both organizations record customer information.
Other laws to be revised at the same time
Furthermore, the Prevention of Transfer of Criminal Proceedings Act, the Foreign Exchange and Foreign Trade Act and the International Terrorist Asset Freezing Act, all of which are related to money laundering, must be revised.
This proposed amendment to the Foreign Exchange and Foreign Trade Act will add stablecoins to the list of regulated assets in the month of May of the coming year. This will prevent transfer to sanctioned parties such as Russia and also transfer from sanctioned parties to third parties.
To prevent the financing of nuclear development in North Korea and Iran, the revised law would require financial and real estate transactions in Japan involving both countries’ nuclear programs to be regulated.
The FATF has proposed improvements to the law arguing that it could serve as a loophole for financing nuclear development.
