How Will Japan Curb Crypto Money Laundering? Here is the Answer

The Japanese government is mulling over the possibility of introducing a new rule in an effort to exert more authority over the cryptocurrency industry. At a cabinet meeting on October 16, lawmakers discussed a “bundling bill,” which would combine six distinct regulations to make it hard to launder money in the cryptocurrency market. The goal of the bill is to prevent money from being laundered.

The legislation will be changed to increase the penalties for money laundering for all types of institutions and to strengthen the know-your-customer (KYC) standards for organizations that deal in cryptocurrency exchanges. The law will be put up for a vote during this session of the National Diet, which is currently underway.

According to the local press, the government plans to establish new remittance laws for digital currency exchanges as a means to combat money laundering. These regulations will apply to digital currency exchanges. In addition, the bill mandates that service providers guarantee they have the most updated version of the list of individuals and organizations who are subject to fines.

New Laws By May 2023

The Japan Crypto Asset Exchange Association (1) (JVCEA) has requested that its member businesses initiate self-regulation in the Japanese market. In addition, the country will have the ability to seize the assets of organizations and individuals that the United Nations have identified as being involved in the proliferation of weapons of mass destruction, and the penalties for crimes involving money laundering will be increased in severity.

Those who violate the regulations may be subject to punishment as a result of the new amendments, which necessitate that cryptocurrency exchanges communicate information during platform transactions. This information may include the names and addresses of customers.

The modification focuses on transactions in which the funds have been taken off the platform, which makes it easier to trace transactions. Those who are found to have participated in illegal activities may be subject to disciplinary action if they are found to have done so.

Given the prevalence of cryptocurrency exchanges and mixers, Japan regards the trade of digital assets as a possible means of money laundering. Japan views this as a potential technique of money laundering. Because of this, businesses that engage in trading cryptocurrencies will also be required to comply with the new regulations.

This decision was taken in the context of Japanese officials examining and lowering corporation tax restrictions for cryptocurrency companies beginning in 2023. This was done in response to criticism and concerns that the regulations are too burdensome coming from lobbying groups for the industry. In spite of all the rules pertaining to cryptocurrencies, individuals cannot deny the reality that their government is working toward expanding the web3 space in order to boost their economy.

Tax Rules in Japan in 2022

At the moment, Japan levies taxes on any realized or unrealized gains made from bitcoin at a rate of up to 55% for individual investors and up to 30% for corporate investors. The government suppressed information about the potential magnitude of these tax rate reductions from the public.

The Lazarus gang, which is believed to have originated in North Korea, was recently exposed to be responsible for years of crypto hacks by the Japanese government. It was mentioned that phishing was one of the attack vectors employed most frequently.