Exchanges that offer anonymous transactions or have weak identity verification practices will be cracked down
On May 22, 2019, news outlet Nikkei Asian has informed that Japan’s Financial Services Agency takes severe measures against cryptocurrency exchanges which offer anonymous transactions or have weak identity verification practices – because of preparing for inspection by the Financial Action Task Force (FATF).
According to the source, the FATF is planning to send staff from its investigatory department to analyze the strength of the Japanese FSA’s anti-laundering (AML) policies, which includes policy for cryptocurrency exchanges and other financial services.
In 2008, FATF gave Japan the lowest possible score for identity verification in financial institutions. In 2018, Japanese FSA approved improvement orders to business practices. However, appropriate AML measures were not taken – for example, users were allowed to subscribe to their accounts with a P.O. box instead of a personal home address.
In October 2018, the FATF improved its rules to include cryptocurrency exchanges in its AML regulatory framework, and asked G-7 member countries to start implementing measures for registration, licensing, and monitoring cryptocurrency exchanges.
Japanese FSA took serious measures to better regulate the cryptocurrency and fintech sectors. In January 2019, it revealed that there were seven pending applications for crypto exchange licenses in the country at that moment. The applications, containing applicant’s responses to over 400 questions, are reviewed for more than a six month period.
Author: Helen Darkhouse