Anti-Money Laundering Efforts in Japan Become More Aggressive Towards Bitcoin


  • Japan is tightening their anti-money laundering efforts to go after Bitcoin exchanges.
  • Russian and Dutch governments are also becoming restrictive in their cryptocurrency regulations, particularly involving money laundering efforts.

In Japan, the regulators are still working to figure out exactly how cryptocurrency lines up with their current economy. Presently, there are some new rules on the table that seem to be targeting Bitcoin exchanges as part of their efforts towards anti-money laundering efforts. These concerns are expected to be addressed at the G20 Summit, which is scheduled on June 28th and 29th in Osaka.

More specifically, the Financial Services Agency (FSA) is taking action against the crypto exchanges that don’t follow protocols to confirm consumer identities. The FSA is also interested in the companies that allow users to participate in anonymous transactions, according to Nikkei Asian Review. It is likely that the many hacking scandals of the cryptocurrency world have led to this implementation of stricter rules. In order to address the changes, the FSA plans to perform an inspection of the current anti-money laundering protocols in a few months.

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During the Summit, the world leaders are expected to weigh in on international regulations that will impact cryptocurrencies. So far, China and South Korea have chosen to completely ban initial coin offerings, but Japan is one of the few areas that allows companies to hold regulated initial coin offerings (ICOs). Two years ago, Japan made history as the first country to ultimately require the crypto exchanges to be registered with local regulators to host their services. The idea of uniform transnational cryptocurrency regulations will be discussed at the Summit as well, considering that this type of rule has not been created yet.

Regulating the market is not just meant to help the economies, but to protect the public as well. Cybercriminals appear to have taken note of the growing popularity of the cryptocurrency industry because the attacks have spiked recently. In March 2019, experts went to the UN Security Council to voice concern over the hacking of at least five exchanges within the Asia continent, headed by North Korea. In the process, these exchanges lost a minimum of $571 million.

When the experts spoke to the council, they stated that the theft of cryptocurrency by North Korea appears to be meant to deal with the financial struggle that has come with dealing with the US economic sanctions. These troubles have continued, allowing the Democratic People’s Republic of Korea to evade sanctions.

bitcoin exchange hacks money laundering

There are many other countries becoming fearful of these attacks and the way that their citizens could ultimately be impacted, causing them to crack down on the crypto exchanges that operate within the countries. Anti-money laundering protocols are becoming absolutely necessary to reduce crime, and even the Dutch Central Bank revealed their new rules for crypto exchanges to get licensed before they can operate.

The bank plans to use their new registration requirements to stay outside of the grasp of money launderers and to keep Bitcoin from becoming an asset that funds terrorism. Any company that wants to get their license will need to have certain Know Your Customer (KYC) procedures and will need to report any transaction that they deem “unusual.” Regulation is crucial for the Dutch Central Bank because money laundering criminals are attracted to the anonymous nature of the industry. One investigation reported over $88 million in laundered money in the last two years, impacting 46 crypto exchanges around the world.

Russia, on the other hand, is delaying their decisions on regulating the cryptocurrency market again. The hold up appears to be due to the same worries that the aforementioned jurisdictions have – the use of crypto assets as a way to launder money, provide terrorism financing, and to hide from taxes. It is not that these issues do not already exist in the traditional finance market; it appears to be due to how new Bitcoin is to already have so much crime related to money laundering recorded in its history.

The new regulations for Russia were expected to be launched in July this year, but an announcement came from the State Duma yesterday that the decision must be delayed for the second time. An official with the Russian Parliament believes that Bitcoin could potentially undermine the authority in the region, as locals pull out capital from the country and move to offshore accounts.

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