The Japanese government should introduce rules that target criminals using crypto from crypto exchanges to launder money. Reportedly, these remittance rules are supposed to be introduced by next springtime.
The Act on the Prevention of the Transfer of Criminal Proceeds is supposed to be revised so that it is mandatory to share customer information between cryptocurrency exchange operators.
This is supposed to track the money transfers of people who are dealing in illegal activities.
The rule that involves sharing customer information requires sharing customer information that includes customers’ names and even addresses when there are crypto transfers between platforms.
This draft amendment to the law shall be submitted to the extraordinary Diet session, which is to take place on October 3.
This bill is intended to add crypto to the money transfer rules, which are known as the travel rules. It will come into effect in May of next year.
The Financial Action Task Force (FATF) is an international organisation that looks into anti-laundering measures. In 2019, the FATF recommended that countries adopt this rule.
This Law Will Apply To Stablecoins That Is A Form Of Crypto
This law will apply to stablecoins, a type of cryptocurrency that is linked to a fiat currency or legal tender. The distribution of stablecoins is connected to a registration system, which is due next spring.
This will happen when the revised Fund Settlement Act is passed during the year’s ordinary session of the Diet comes into effect.
The use of cryptocurrencies in Japan has become rampant in recent times. This is why the government is planning to impose a broader monitoring system for cryptocurrencies.
The cash transactions that occur between the banks are recorded and also traced by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) when international money transfers take place.
It is also traced by the Japanese Bankers’ Association’s Zengin System when it comes to domestic money transfers, and both organisations record customer information.
Other Acts To Be Revised At The Same Time
Furthermore, the Prevention of Transfer of Criminal Proceeds Act, the Foreign Exchange and Foreign Trade Act, and the International Terrorist Asset-Freezing Act, all of which are related to money laundering, must be revised.
This proposed amendment to the Foreign Exchange and Foreign Trade Act will add stablecoins to the list of regulated assets in the month of May in the upcoming year. This will prevent the transfer to sanctioned parties such as Russia and also the transfer from sanctioned parties to third parties.
To prevent funding for nuclear development in North Korea and Iran, the revised law will require financial and real estate transactions in Japan involving both countries’ nuclear programmes to be regulated.
The FATF has suggested improvements to the law which argues that it could serve as a loophole for funding nuclear development.