Japan’s Financial Services Agency (FSA) is preparing to hand out business improvement orders to five major licensed cryptocurrency exchanges in the country this week, directing them to fix a number of issues in their internal systems.
According to a report by the Nikkei Asian Review, the FSA found, upon inspection, that five registered crypto exchanges in the country – bitFlyer, BitBank, Quoine, BITPoint Japan, and BtcBox – had gaps in their internal management systems, particularly in their anti-money laundering measures. The regulator is now preparing to issue improvement orders before the end of this week.
The FSA’s tightening grip has been attributed to the fact that the deposits of exchange clients are rapidly increasing, owing to which the regulatory body is looking to ensure that effective AML measures are in place. The agency’s investigation found that some registered exchanges have yet to implement effective systems for detecting suspicious transactions, while others do not appear to have enough staff to handle the ever-increasing transaction volume.
Following the massive Coincheck hack earlier this year, the FSA undertook a thorough inspection of the cryptocurrency exchanges in the country. In April, the agency suspended two exchanges and issued an improvement order to a third, in order to beef up security measures. Last month, the FSA also established new rules for crypto exchanges to follow, including a complete ban on cryptocurrencies that offer anonymity, owing to the risk of money laundering.
The agency’s latest move, meanwhile, comes on the heels of a decision taken by the Japanese Virtual Currency Exchange Association (JVCEA) – a self-regulatory group formed by major Japanese crypto exchanges, following the Coincheck hack, and chaired by bitFlyer CEO Taizen Okuyama. The association recently offered a glimpse into the self-regulatory guidelines it has been developing, which include a complete ban on insider trading as well as privacy coins such as Monero and Zcash.
This article appeared first on Cryptovest
