Report: Japan's crypto anti-money laundering laws will begin in June
May 24, 2023 6:32 AM
The Japanese lawmakers have resolved to implement stricter anti-money laundering procedures in accordance with the "travel rule."
Japanese lawmakers have decided to implement tighter anti-money laundering (AML) procedures to track cryptocurrency transactions beginning June 1.
According to a report→ published the same day by local news site Kyodo News, the Japanese parliament decided on May 23 to implement tighter AML processes beginning next month.
The measure is intended to align Japan's legal framework with global crypto rules.
The Financial Action Task Force (FATF), an international financial watchdog, declared the AML legislation unsatisfactory in December, prompting lawmakers to modify it.
According to reports, enforcing the "Travel Rule" to maintain a more exact track of illegal proceeds is a critical component of the new measures.
The travel regulation requires any financial institution that processes a cryptocurrency transfer worth more than $3,000 to provide client data to the recipient exchanges or organizations. The data should include the sender's and recipient's names and addresses, as well as account information.
The Travel Rule was debated by world leaders during the G7 conference in Japan in mid-May, with the G7 Committee stating unequivocally its support for the Travel Rule for crypto transactions.
It backed FATF measures to accelerate global crypto standards, "including the 'travel rule,' as well as its work on emerging risks, such as DeFi arrangements and peer-to-peer transactions."
Japan was an early embrace of cryptocurrency, legalizing it as property. Japan's cryptocurrency restrictions are among the most severe in the world.
Following the massive hacks of Mt.Gox and Coincheck, Japan's financial regulator, the Financial Services Agency, tightened regulations on cryptocurrency exchanges.
To protect customers, the FSA has various restrictions for exchanges, including separate ownership of customer and firm assets, with holdings verified in annual audits.
For leveraged trading on exchanges, investors cannot borrow more than twice their investment. Licensed cryptocurrency exchanges must also keep at least 95% of customer assets in cold wallets.
In April, Japan's ruling Liberal Democratic Party's Web3 project team produced a white paper recommending measures to boost the country's crypto business.