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FameEX Hot Topics | Japan Set to Enforce Enhanced Cryptocurrency Anti-Money Laundering (AML) Regulations, Including 'Travel Rule,' Starting June

2023-05-25 16:03:35

Starting from June 1, Japan will enforce stricter anti-money laundering (AML) measures for the cryptocurrency sector, according to local media reports. The new regulations are designed to bring Japan's legal framework for cryptocurrencies in line with international standards, enabling the government to trace digital asset transactions effectively.

The decision to implement more stringent AML rules for cryptocurrency operations was made by the Cabinet of Japan, Tokyo's executive power. This move is a response to recommendations from the Financial Action Task Force (FATF), an intergovernmental organization focused on combating money laundering and terrorism financing.

To address concerns raised by the FATF about Japan's previous AML procedures being insufficient, lawmakers in the country amended the relevant laws in December 2022. Additionally, regulatory bodies in Japan have been strengthening their monitoring efforts to detect potential instances of money laundering involving cryptocurrencies.

One crucial mechanism introduced to improve the tracking of digital money is the "travel rule." This rule mandates that service providers must identify both the sender and receiver of cryptocurrency transfers, ensuring that this information accompanies each transaction.

The updated regulations extend beyond cryptocurrencies like bitcoin and include stablecoins pegged to fiat currencies such as the U.S. dollar or various commodities. Entities that fail to comply with corrective orders issued by Japanese regulators may face criminal prosecution.

These developments in Japan follow the recent summit of the Group of Seven (G7) developed economies, with Japan being a member. Prior to the meeting, FATF President T. Raja Kumar called on G7 nations to put an end to the "lawless crypto space" in an article. In line with FATF requirements, Pakistan also recently announced its intention to ban online cryptocurrency services.

With the enforcement of stricter AML regulations, Japan aims to enhance the integrity of its cryptocurrency sector and combat illicit activities like money laundering. By aligning its legal framework with global standards, the government seeks to foster trust and security within the digital asset ecosystem while enabling more effective tracking of digital transactions.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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