• Japan is enacting additional anti-money laundering measures to better monitor crypto transactions.
• The government plans to apply the new restrictions on June 1, which would see the implementation of what is known as the travel rule.
• The country’s first effort at adopting the regulation in 2021 was deemed insufficient by the Financial Action Task Force (FATF).
Strengthening Anti-Money Laundering Measures
Japan is anticipated to enact additional anti-money laundering measures to better monitor crypto transactions. To prevent, identify, and punish money laundering and other financial crimes, it mandates the sharing of specific information between financial institutions for the purpose of transaction traceability. This includes each phase of a particular transaction must also include relevant names, addresses, and other personally identifiable information necessary for processing the transaction.
Travel Rule Implementation
The government plans to apply these new restrictions on June 1st which would see the implementation of what is known as “the travel rule”. Providers of virtual asset services were included in a subsequent revision of this regulation.
Critiques from FATF
Japan’s initial attempt at adopting this regulation in 2021 was deemed insufficient by the international organization responsible for implementing this rule; The Financial Action Task Force (FATF). For two years they have responded to critiques by increasing stringency when it comes to crypto legislation.
In order to provide a framework for stablecoins and classify them as digital currencies, last year Japan passed a major investor protection measure. Stablecoins may only be issued by legally recognized financial institutions such as banks, money transfer businesses, or trust firms. As well as requested amendments to its Foreign Exchange Act in an effort to restrict cryptocurrency transactions that would benefit sanctioned Russian nationalists.
To keep up with other countries within Asia-Pacific region, Japan is strengthening its anti-money laundering measures when it comes to cryptocurrency transactions through implementing “the travel rule” and more stringent regulations surrounding stablecoins issuance and foreign exchange acts.