Japan Implements Stricter AML Rules for Crypto Transactions Starting June 1st

Japan Implements Stricter AML Rules for Crypto Transactions Starting June 1st

Japan will enforce stricter anti-money laundering rules for the crypto sector starting June 1, aligning its legal framework with global standards and allowing for the tracing of digital-asset transactions.

Stricter anti-money laundering (AML) measures for the cryptocurrency sector in Japan will enter into force next 30 days, local media informed. The new regulations were adopted to align the country’s judicial system for digital currencies with worldwide standards in the field.

Japan to Enforce Legislation Allowing the Tracing of Cryptocurrency Transactions

The Cabinet of Japan, the executive power in Tokyo, has decided to enforce more stringent AML regulations for digital currency operations from June 1, the Kyodo News agency informed. The measures will attract the nation’s regulatory framework in line with international standards and allow the Government to trace digital- investment transactions.

Japanese lawmakers amended the respective laws in December 2022, in response to recommendations by the Financial Action Task Force (FATF), the intergovernmental organization developing policies designed to combat money laundering and terrorism financing.

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The FATF had evaluated Japan’s previous AML procedures as insufficient. Apart from the legislative revisions, the country’s oversight bodies have been strengthening their monitoring of cryptocurrency assets that can potentially be used to launder illicit funds.

1 of the mechanisms that should enable authorities in Japan to better track the movement of digital money is the so- was known ‘travel rule.’ It requires service providers to identify both the sender and receiver of a cryptocurrency transfer, with this information “traveling” with each transaction.

In addition to digital currencies like Bitcoin (BTC), the updated regulations likewise cover crypto stablecoins pegged to fiat currencies like the United States dollar or numerous commodities, the report notes. Entities failing to comply with corrective orders announced by Japanese regulatory authorities will face criminal prosecution.

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The latest information from Tokyo comes after the past few summit in Hiroshima of the Group of 7 (G7) developed economies, of which Japan is a member. In an post published ahead of the meeting, the FATF President T. Raja Kumar urged the G7 countries to attract an “end to the lawless cryptocurrency space.” Citing FATF requirements, Pakistan recently announced its intentions to ban online cryptocurrency services.


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