Japan is set to implement stricter anti-money laundering measures, including the so-called “travel rule” of the Financial Action Task Force (FATF) from June 1, according to local news outlet Kyodo News.
The decision was made by Japan’s cabinet on Tuesday after the nation’s anti-money laundering steps were deemed insufficient by global financial crimes watchdog FATF, the report said.
In 2019, the FATF recommended the travel rule to combat money laundering and terrorist financing using crypto. By June 2022, the FATF was urging member nations to introduce travel rule legislation “as soon as possible.”
Earlier this month, the Group of Seven (G-7) intergovernmental political forum signaled its support for the FATF’s efforts to accelerate global implementation of its travel rule, which mandates the sharing of information on crypto fund transfers between financial institutions. Japan had not implemented the travel rule at the time.
Japan’s move to implement the rule is seen as a bid to align with global standards supported by the G-7, of which Japan currently holds presidency.
Japan’s crypto industry has been grappling with the travel rule since 2021 when Japan’s Financial Services Agency (FSA) requested virtual asset services providers to implement it. In April 2022, Japan’s Virtual Currency Exchange Association (JVCEA) introduced self-regulatory rules accordingly. In October last year, Japan’s government approved a cabinet decision to amend existing laws to curb money laundering using crypto, in line with FATF guidelines.