Monday, November 28, 2022

Japan Moves to Enact Stricter AML Rules for Crypto

Local news reports emerging from Japan can confirm that the government is intensifying its efforts to clamp down on the use of crypto for money laundering purposes. So, to this end, the government has approved a cabinet proposal to revise existing anti-money laundering (AML) rules.

According to a Bittimes report, the cabinet agreed to make necessary adjustments to Japan’s Foreign Exchange Act on October 14. The cabinet also decided to look into the Act on Prevention of Transfer of Criminal Proceeds as well for revision.

Japan Looks to Meet FATF’s AML Rules Standards

It is worth mentioning that the decision of Japan to make its AML rules stricter may be in line with earlier recommendations from the global AML regulator, the Financial Action Task Force (FATF).

Without a doubt, bad actors continue to use cryptocurrencies and crypto exchanges to launder money and proceeds from their criminal activities. And in fact, the trend keeps growing by the day.

However, the FATF’s guidelines regarding the issue of money laundering are what Japan has been looking to implement since 2021. This is despite the outcry of many Japan-based crypto exchanges. The exchanges complain that complying with the FATF rules will prove to be too costly and burdensome.

The Amendment

According to local reports, the newly-approved amendment will, as a requirement, mandate all crypto exchanges in its jurisdiction to share customer information when transactions occur between platforms. The information may include customer names and addresses. And there is also a possibility of introducing penalties to be meted out to those who flout the new rules.

For now, however, the revisions have only been approved by the cabinet. This means that soon, the bill will be submitted to the national legislature of Japan — the Diet. This is where the AML bill will be deliberated upon and could become law. However, that is only if it is passed by both chambers of the Diet.

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