Japan’s FSA Cracks Down on Crypto Exchanges with Lax Practices

Asia Blockchain Review
June 2, 2019

Japan’s Financial Services Agency (FSA) has been cracking down on cryptocurrency exchanges with weak identity verification practices or that offer anonymous transactions ahead of inspections by the Financial Action Task Force (FATF) later this year.

As reported by Cointelegraph, the FATF plans to send its investigatory arm to review the strength of the FSA’s anti-money laundering (AML) policies, including those for financial services such as crypto exchanges.

In a 2008 report by the FATF, Japan received the worst possible score for identity verification in financial institutions. 10 years later, the FSA issued orders for improving business to practices which were not taking appropriate AML measures, including enabling users to register for accounts with a PO box instead of a personal home address.

According to the FATF report, Japan became the first country to adopt a registration system for crypto exchanges.

In October 2018, the task force amended its rules to cover crypto exchanges in its AML regulatory framework, while urging other G7 nations to begin implementing strategies for registration, licensing, and monitoring crypto exchanges.

In June of this year, the country will host the Summit on Financial Markets and the World Economy (G20 2019) in Osaka, where topics are expected to include international crypto regulations and initial coin offerings (ICOs).

The FSA revealed in January that are seven applications for crypto exchange licenses are currently pending, reviewed over a six-month period because the financial body scrutinizes each applicant’s responses to more than 400 inquiries.

In July 2018, the FSA underwent a major overhaul to better deal with the challenges of regulating fintech and cryptocurrency sectors.

Source: cointelegraph.com

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