The Japanese government is planning to introduce new rules for remittances directed at stopping criminals from using cryptocurrency exchanges to launder money, according to a Nikkei report.
The rules will require exchanges to share customer information – including customers' names and addresses – when they transfer crypto between platforms.
The move is intended to provide Japanese authorities additional monitoring capabilities to track money transfers by people engaged in illegal activities. Violators could face corrective orders or criminal penalties, according to the report.
Japan's Act on Prevention of Transfer of Criminal Proceeds will be amended to include the new remittance rules. A draft amendment to the law will be submitted to a parliamentary session scheduled for Oct. 3 but the rules are expected to take effect in May 2023, the report said.
Japan's cryptocurrency exchanges have been in negotiations with the government about sharing customer information since last March, when Japan’s Financial Services Agency (FSA) ordered exchanges to implement a framework to fulfill the travel rule, which encapsulates the recommended anti-money laundering norms for crypto by global standard-setter Financial Action Task Force (FATF). Exchanges have noted concerns about heavy compliance costs.
The law will also apply to stablecoins, a type of cryptocurrency tied to the price of another asset – like the U.S. dollar or gold – to stabilize the price.
The report comes as the Japanese yen slides relentlessly against the dollar. The yen fell to a 24-year low of 145.90 per dollar earlier this week.
Sharp currency devaluations often have domestic investors scurrying to park money in overseas assets via cryptocurrencies.
UPDATE (Sept. 27, 12:43 UTC): Adds detail on market impact.