In efforts to tighten its fight against money laundering and fraudulent activities using cryptocurrencies, The Japanese Financial Services Agency (FSA) asks the industry to adopt the FATF rule. Following an update of the previous rule after consulting the public in February 2021, the body now requires its adoption.
The Financial Action Task Force (FATF) requires digital service providers to reveal data on transactions of both senders and recipients that use the platform. In the notification, FSA asked the Japan Virtual Currency Exchange Association (JVECA) to communicate to its members about the new rule.
Compliance with FATF Guidelines
Put in place in 1990, FATF is a global watchdog against the funding of terrorism through money laundering and drug trafficking. The FATF travel rule, also commonly known as the Crypto Travel Rule, was accepted in June 2019, requiring digital money transfer providers to capture their users’ information accurately.
The Japanese FSA has asked its country’s crypto trading associations to attach a separate sheet which they announce soon.
Failure to comply with the guidelines allows the VASP body to penalize them, which may take the form of addition to a watchlist or total blacklisting.
Impact of the FATF Rule on Crypto
By last year, about 20 countries had blacklisted trading in Bitcoin and other cryptocurrencies. As more countries embrace the rule and implement it into their jurisdiction, money laundering through crypto will greatly reduce.
The task force is continuously assessing its guidelines as the digital world continues to grow at a fast pace.