The Japanese parliament has decided to implement stricter anti-money laundering (AML) procedures in accordance with the “travel rule.”
From June 1, lawmakers in Japan will impose more stringent Anti-Money Laundering (AML) regulations to track Bitcoin transactions. According to a report from the local media outlet Kyodo News on May 23, the Japanese parliament ruled to implement stricter AML regulations starting next month.
The shift intends to align the legal framework of Japan with global crypto regulations.
After being considered insufficient by the Financial Action Task Force (FATF), a global financial watchdog, lawmakers updated the AML legislation in December. A key component of the new regulations, it has been reported, is the “Travel Rule”‘s enforcement in order to more precisely follow the proceeds of crime.
Any financial institution handling a cryptocurrency transfer of more than $3,000 is required by the travel regulation to provide the recipient exchange or institution with client information. The sender’s and recipient’s names, addresses, and account information should all be included in the data.
At the G7 summit that took place in Japan in the mid of May, the Travel Rule was debated by world leaders, and the G7 Committee made it very clear that it supported the Travel Rule for cryptocurrency transactions.
It backed FATF initiatives to accelerate the adoption of global crypto standards, “including the travel rule, and its work on emerging risks, including from DeFi arrangements and peer-to-peer transactions.”
“G7 countries should lead by example and regulate the crypto sector so that no safe havens exist for illicit crypto transactions”#FATF President T. Raja Kumar´s message to #G7 leaders ahead of the summit in Japan
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— FATF (@FATFNews) May 18, 2023
Japan was one of the first countries to legalize cryptocurrency as property. The Japanese government has some of the strictest laws in the world regarding cryptocurrencies.
Following the significant hacks of Mt.Gox and Coincheck, Japan’s financial regulator, the Financial Services Agency, tightened regulations on cryptocurrency exchanges.
The FSA has a number of regulations for exchanges to safeguard customers, including separate asset holdings for customers and the corporation, with holdings verified by annual audits.
For leveraged trading on exchanges, investors are not permitted to borrow more than twice their investment. A minimum of 95% of customer funds must be stored in cold wallets by authorized cryptocurrency exchanges.
The Web3 project team of the ruling Liberal Democratic Party of Japan published a white paper in April outlining ideas for growing the nation’s crypto economy.