The Japanese parliament has made the decision to implement more stringent anti-money laundering procedures, aligning with the “travel rule.” Starting from June 1, lawmakers in Japan will enforce these measures to track cryptocurrency transactions.
According to a report from local media outlet Kyodo News on May 23, the Japanese parliament has decided to introduce stricter anti-money laundering (AML) procedures starting next month.
The objective of this action is to align Japan’s legal framework with international crypto regulations. In response to concerns raised by the Financial Action Task Force (FATF), the global financial watchdog, lawmakers in Japan made revisions to the anti-money laundering (AML) legislation in December. These revisions were deemed necessary as the existing regulations were considered inadequate.
As per reports, a significant aspect of the new measures involves the implementation of the “travel rule” to enhance the monitoring of illicit funds and maintain a more precise record of their movement.
Under the travel rule, if a financial institution facilitates a cryptocurrency transfer exceeding $3,000, they are required to share customer information with the receiving exchange or institution. This information should include the names, addresses, and account details of both the sender and the recipient.
During the G7 meeting held in Japan in mid-May, global leaders engaged in discussions regarding the travel rule. The G7 Committee expressed strong support for implementing the travel rule specifically for cryptocurrency transactions.
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The G7 Committee expressed its support for the Financial Action Task Force (FATF) initiatives aimed at establishing faster global standards for cryptocurrencies, which includes implementing the travel rule. They also acknowledged the importance of addressing emerging risks associated with decentralized finance (DeFi) arrangements and peer-to-peer transactions.
“G7 countries should lead by example and regulate the crypto sector so that no safe havens exist for illicit crypto transactions”#FATF President T. Raja Kumar´s message to #G7 leaders ahead of the summit in Japan
Read article: https://t.co/l1OTdjGgLY
📑: https://t.co/GqHhVwoqY9 pic.twitter.com/uDurg1QSDu— FATF (@FATFNews) May 18, 2023
Japan embraced cryptocurrency early on by legalizing it as a form of property. The country has implemented some of the strictest crypto regulations worldwide. In response to significant hacks experienced by exchanges like Mt.Gox and Coincheck, Japan’s financial regulator, the Financial Services Agency (FSA), enhanced regulations for crypto exchanges.
To ensure customer protection, the Financial Services Agency (FSA) has established several rules for crypto exchanges. These rules include the requirement for separate storage of customer and company assets, which are verified through annual audits.
For leveraged trades on exchanges, investors are not allowed to borrow more than twice the amount of their own investments. Additionally, licensed crypto exchanges are obligated to store at least 95% of customer funds in cold wallets.
In April, the Web3 project team, associated with Japan’s ruling Liberal Democratic Party, published a white paper suggesting methods to enhance the growth of the country’s cryptocurrency industry.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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