Key Takeaways:
- New regulations for remittances are being planned by the Japanese government in an effort to prevent criminals from exploiting crypto exchanges as a means of money laundering.
- The regulations call for exchanges to share user data, such as names and addresses when transferring cryptocurrency between platforms.
According to a report, the Japanese government is preparing to enact new remittance limitations soon. These regulations, which would require exchange operators to exchange client data, are designed to stop criminals from using crypto exchanges as a way of money laundering.
The Act on Prevention of Transfer of Illicit Proceeds, which essentially prohibits the transfer of criminal proceeds, has already been put into action in Japan.
The laws will be changed to require that operators of cryptocurrency exchanges share client information. The action intends to track financial transactions made by people engaged in illegal activity.
The law will also expand the travel regulations that already cover money transfers to include bitcoin.
A proposed legislative change will be presented before the extraordinary Diet session, which will start on October 3.
The law will expand the definition of cryptocurrency in the travel rules that govern money transfers. In May 2023, it is anticipated to become effective.
Exchange operators who are found to be in violation of the rules will be given administrative advice and face corrective action.
According to the study, those who refuse to comply with these types of requirements could face legal consequences.
Since last March, when Japan’s Financial Services Agency (FSA) instructed exchanges to enforce a structure to comply with the travel rule, which embodies the suggested anti-money laundering guidelines for crypto by the global standard-setter Financial Action Task Force, exchanges have been in bargaining with the authorities about sharing customer data (FATF). Concerns regarding high compliance costs have been raised by exchanges.
When transmitting cryptocurrency to another exchange, the amended regulation will oblige cryptocurrency exchanges to submit user data, including the consumer’s name and address. The legislation aims to track the locations and times of crypto transfers made by criminals.
Finally, the new regulations will assist the Japanese government in imposing limits on anyone involved in Iran’s and North Korea’s nuclear programs in regard to their financial and real estate activities. To stop funding for nuclear development in certain countries, this has been done.
The proposed revision to the Foreign Exchange and Foreign Trade Act will result in the addition of stablecoins to the list of regulated assets in May 2023.
Additionally, transfers to and from countries like Russia that have been sanctioned would be prohibited.
The report is released as the Japanese yen continues to fall precipitously versus the dollar. Earlier this week, the yen hit a 24-year low against the dollar, trading at 145.90.
The recent crypto-related development in Japan was the announcement of plans to shortly introduce new bitcoin tax legislation in an effort to prevent budding businesses from leaving the country.
The corporate crypto tax legislation will be reviewed starting in 2023, according to the Japanese government.
According to reports, the Financial Services Agency (FSA) and the Ministry of Economy, Trade, and Industry (METI) will be considering how to tax businesses that use cryptocurrencies “to support entrepreneurs.”
