• Japan is strengthening its anti-money laundering measures for crypto transactions.
• The new travel rule mandates the sharing of specific information between financial institutions for the purpose of transaction traceability.
• The Financial Action Task Force (FATF) had previously deemed Japan’s first effort at adopting the regulation in 2021 as insufficient.
Japan Strengthens Anti-Money Laundering Measures
Japan is anticipated to enact additional anti-money laundering measures to better monitor crypto transactions in order to keep in line with other countries in the region. According to Japan Today on Tuesday, the country’s government plans to apply the new restrictions on June 1, which would see the implementation of what is known as the travel rule.
Travel Rule Mandates Information Sharing
The travel rule mandates the sharing of specific information between financial institutions for the purpose of transaction traceability and to prevent, identify, and punish money laundering and other financial crimes. Each phase of a particular transaction must also include the relevant names, addresses, and other personally identifiable information necessary for processing the transaction. Providers of virtual asset services were included in a subsequent revision of the regulation.
FATF Critiques Initial Efforts
Japan’s first effort at adopting this regulation in 2021 was deemed insufficient by international organization responsible for implementing it – The Financial Action Task Force (FATF). For two years since then, Japan has responded to critiques by increasing stringency of its crypto legislation. It publicly shamed Japan for its “inadequate progress” on problem of digital assets which was among charges levelled against country.
Investor Protection Measure Passed
Therefore, Japanese legislature passed major investor protection measure last year providing framework for stablecoins and classifying them as digital currencies which may only be issued by legally recognized financial institutions including banks, money transfer businesses, and trust firms. Simultaneously government requested amendments to Foreign Exchange Act in effort restrict cryptocurrency transactions that would benefit sanctioned Russian nationalists.
In conclusion , Japan is making efforts towards improving its anti-money laundering regulations when it comes to cryptocurrencies . These measures will help protect investors from fraud while ensuring that financial crime can be identified and prevented .