Japan to Enact Tougher Crypto Laws as Part of Its AML Policy

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Japan is set to join the anti-crypto block by enacting tougher laws on Bitcoin and crypto transfers. Earlier this month, the global crypto watchdog FATF urged G-7 countries to impose tougher rules as part of their anti-money laundering policies. More specifically, it directly addressed Japan as the country that should impose the famous ‘travel rule’ on crypto transactions.

It didn’t take a long time for Japan to submit. The country will implement new measures on crypto transfers starting from June 1. It comes after FATF found the current measures insufficient in a report, prompting a chance of plans for Japan’s cabinet.

The Travel Rule

The FATF—short for Financial Action Task Force—is a global task force that oversees all kinds of financial activity. It has recently urged G-7 countries to implement to so-called crypto travel rule that will tighten the grip on crypto transfers. This rule was implemented as an AML policy by FATF in 2019. It essentially allows the watchdog and governments to combat money laundering and terrorist financing. In June of 2022, the FATF sent a report which urged the world’s biggest economies to implement it, and almost a year later, Japan did it.

Starting from June 1, there will be much tougher laws for crypto transfers in the Asian country. Sharing information on crypto fund transfers between financial authorities will be mandatory. Japan has pushed off on implementing the policy for a while, but now seems to align with global standards.

The Japanese crypto industry is currently open, but the country has been considering other moves to implement and get closer to what FATF wants. It adopted what was a precursor to the rule in 2021, asking virtual asset providers to share data on crypto transfers. But, since there was no law on it, many have denied to frustrate the Japanese government.

But, under the new rules and laws everyone will need to share reports about crypto transfers made on their websites or mobile apps, which should cut down on terrorist financing and prevent money laundering.

Not the First Country to Implement the Travel Rule

Although it comes at a later date, this isn’t the first time a country had to implement the ‘travel rule’ because of the FATF. It drew up an action plan on the timely implementation of the rule and urged everyone to comply with it since a few years ago. During one of its plenary meetings, the FATF announced that out of 89 jurisdictions it keeps its eye on, only 11 were enforcing this rule.

That was simply not acceptable, so the watchdog decided to up its game and call out governments specifically. As for the nature of it all, the Financial Action Task Force said that some transfers disrupt financial flaws and that criminals responsible for it all are getting away with large sums of money which are predominantly virtual assets.

It remains to be seen how the law will be taken by crypto exchanges and companies, who say that it defeats the purpose of crypto.

May 31, 2023: • No Comments

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