The Japanese Government will reportedly put in place some remittance regulations in an effort to stop criminals from utilizing crypto exchanges to launder money. The new rules expect to take effect from next spring, supposedly as early as May 2023.
Japan has already implemented the Act on Prevention of Transfer of Criminal Proceeds which effectively prevents criminal funds from being transferred. However, the act will receive amendments to mandate that crypto exchange operators share client information. The move aims to track transactions made by individuals in unlawful activities. Furthermore, the law will add crypto to the travel rules which govern money transfers.
The Foreign Exchange and Foreign Trade Act and the International Terrorist Asset-Freezing Act, both of which are relevant to money laundering, will also receive updates. The updated legislation will also enable persons connected to the nuclear projects of North Korea and Iran to have their financial and real estate dealings in Japan subject to regulation.
According to news outlet Nikkei Asia, the proposed legislative change will be presented before the extraordinary Diet session, which will start on October 3.
How will the Rule Curb Money Laundering in Crypto?
The amended regulation will oblige cryptocurrency exchanges to submit customer information. This includes the consumer’s name and address, when transferring crypto to another exchange. The legislation aims to track the locations and times of bitcoin transfers made by criminals.
Additionally, if a crypto exchange operator violates the regulations, they will get administrative instructions. The concerned exchange must comply with corrective actions. Moreover, Japan will apply criminal sanctions to those who disobey such orders.
Stablecoins will be added to the list of regulated assets in May 2023. That is a result of the proposed amendment to the Foreign Exchange and Foreign Trade Act. Moreover, it will bar transfers to and from sanctioned entities like Russia and other parties.
The FATF (Financial Action Task Force) recommended implementing the rule back in 2019. The United States, Germany, Singapore, and other nations all put laws into place. In addition,, the European Union is starting to do the same.