Japan to fight crypto money laundering with new rules

The Japanese government is said to have implemented remittance regulations in an effort to prevent criminals from using crypto exchanges to launder money. The new rules are due to come into force next spring, supposedly as early as May 2023.

Japan has already implemented the Prevention of Transfer of Proceeds of Crime Law which effectively prevents the transfer of proceeds of crime. However, the law will receive changes to require crypto exchange operators to share customer information. This decision aims to track transactions made by individuals in illegal activities. Additionally, the law will add crypto to the travel rules that govern money transfers.

The Foreign Exchange and Foreign Trade Act and the International Terrorist Assets Freezing Act, both of which are relevant to money laundering, will also be updated. The updated legislation will also allow people connected to North Korea’s and Iran’s nuclear projects to subject their financial and real estate dealings in Japan to regulation.

According to the Nikkei Asia media, the proposed legislative change will be presented before the extraordinary session of the Diet, which will begin on October 3.

How will the rule curb money laundering in crypto?

The amended regulations will require cryptocurrency exchanges to submit customer information. This includes the consumer’s name and address when transferring crypto to another exchange. The legislation aims to track the locations and times of bitcoin transfers made by criminals.

Additionally, if a crypto exchange operator violates regulations, they will receive administrative instructions. The affected exchange must comply with the corrective actions. In addition, Japan will apply criminal penalties to those who disobey these orders.

Stablecoins will be added to the list of regulated assets in May 2023. This is the result of the proposed amendment to the Foreign Exchange and Foreign Trade Law. Additionally, it will prevent transfers to and from sanctioned entities like Russia and other parties.

The FATF (Financial Action Task Force) recommended the rule be implemented in 2019. The United States, Germany, Singapore, and other countries all have laws in place. Moreover, the European Union is beginning to do the same.