Suspicious financial transactions filed by Japan-based cryptocurrency exchanges increased ten times over the previous year, according to the National Police Agency.
The central enforcement body said Feb 28 that 7,096 out of the total 417,465 suspected money laundering cases mentioned the use of cryptocurrencies in 2018. In the period between April and December 2017, the agency had reported 669 of such cases, after it became compulsory for crypto services to report suspicious dirty money transactions under an amended ‘Law for Prevention of Transfer of Criminal Proceeds.’
NPA noted that criminals were using a variety of tricks to conceal their identities during a mandatory know-your-customer procedure. In many instances, suspected offenders had different names and birth dates but the same ID photo. In a few cases, users logged into cryptocurrency exchanges from abroad even though they said they were in Japan. The agency also noted that criminals were allegedly using cryptocurrencies to purchase drugs and child pornography from underground online marketplaces.
NPA acknowledged that the number of confirmed money laundering cases in 2018 had touched a high of 511. That marked a 42-percent jump over the previous year. The agency confirmed that in 377 cases, offenders had a definite motive to cover up the proceeds of criminal activities. At the same time, 36 among these cases involved organized crime organizations, a 57-percent increase than in 2017.
Nevertheless, banks, payment firms, and credit card service providers reported more suspicious money laundering transactions than cryptocurrency exchanges in 2018. The NSA noted that banks and other financial institutions had listed 346,014 cases. At the same time, they received reports of 15,114 irregular economic activities from credit card firms.
On the whole, NPA handed 8,259 cases to higher authorities and kept 1,124 cases that involved fraud with itself. It is reportedly investigating the rest of the cases, the outcome of which would take its course of legal action.
Despite being a crypto frontrunner when it comes to regulation, Japan had suffered a series of significant setbacks. The country’s crypto records are full of crypto thefts already. Atop that, an increase in money laundering crimes prevents their crypto sector from growing to its full potential.
In its response, NPA plans to train technologists in data analysis, and build newer artificial intelligence tools that would detect anomalies in cryptocurrency trading. Per the agency, their new workforce will detect patterns that relate cryptocurrencies with drugs and money laundering crimes.
On the regulatory front, Japan’s financial regulator, the Financial Services Agency, has mounted its surveillance on local cryptocurrency exchanges to prevent crimes related to money laundering and terrorist financing.
Last modified: March 4, 2021 2:54 PM