Tighter regulation of virtual currency
On the 23rd, the Japanese government approved a cabinet order to tighten regulations on crypto assets (virtual currencies).
This is a revision of the Act on Prevention of Transfer of Criminal Proceeds, and there have already been confirmed cases in Japan of exchanges sending relevant information to users. Many domestic media reported that the new rules will be enforced from the 1st of next month. The aim is to comply with the travel rules advocated by the Financial Action Task Force (FATF) and strengthen measures against crimes such as money laundering.
What is FATF
An abbreviation of “Financial Action Task Force”, it is an international organization that oversees anti-money laundering (AML) and countering the financing of terrorism (CFT). Although the rules and recommendations it presents are not legally binding, they have great influence because they conduct examinations of member countries and disclose the list of non-cooperating countries in AML and CFT.
In the 4th Mutual Evaluation Report for Japan announced in August 2021, the FATF judged Japan to be virtually unsuccessful. This is a comprehensive review, not just for cryptocurrencies.
In this review, the FATF evaluated AML and CFT as trying to address high-risk areas, including cryptocurrencies, but explained that Japan’s policies and strategies are not specific to AML and CFT activities. However, overall there is still room for improvement.
connection: FATF announces results of mutual review of Japan, including virtual currency industry
Japan’s virtual currency exchanges have been responding to the travel rule in stages, but interest in the ordinance approved by the Cabinet this time is particularly high. This is because direct remittances will not be possible in some areas, even between domestic exchanges.
This is mainly due to the different systems adopted by each exchange in response to travel rules. Currently, the systems adopted by Japanese exchanges are divided into two. For example, it will be impossible to send money from Bitbank to Coincheck. This response is based on the government ordinance that was decided by the Cabinet this time.
connection: Bitbank announces restrictions on coin checks and direct remittances to bitFlyer in response to travel rules
G7 leads by example
The FATF’s travel rules were also highlighted at the G7 summit this month. FATF Chairman Raja Kumar released a document on the 18th, just before the summit, stating that international standards advocated by the FATF, such as travel rules, should be thoroughly observed in the cryptocurrency sector.
G7 countries should lead by example and regulate the cryptocurrency sector so that there is no safe place for illicit financial transactions, Kumar said, citing FATF recommendations not being implemented in many regions. claimed.
connection: FATF chair calls on G7 to regulate cryptocurrency sector
The G7 stated the following in the Leaders’ Declaration of the Summit.
Effective monitoring, regulation and oversight while supporting responsible innovation are critical to addressing financial stability and prudential risks and avoiding regulatory arbitrage posed by cryptocurrency activity and markets. be.