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Japanese Police See Surge in Suspicious Cryptocurrency Trade Reporting

Last Updated October 4, 2020 5:12 PM
David Hundeyin
Last Updated October 4, 2020 5:12 PM

The National Police Agency of Japan has revealed that between January and October this year, it recorded 5,944 reports from crypto exchanges regarding suspicious cryptocurrency transactions possibly involving money laundering and tax evasion.

Figures reported by Jiji Press  show that from 699 cases reported last year, the numbers have multiplied more than eight-fold, which the NPA sees as proof that operators are taking their reporting obligations more seriously now.

According to a report in the Japan Times  699 cases of suspicious cryptocurrency transactions were recorded between April and December last year. Earlier this year, CCN.com reported that while more that 660 million yen was stolen last year from cryptocurrency exchanges and individual wallets, this figure jumped to over 60 billion yen in only the first half of this year. Following these alarming discoveries, new laws were implemented in April, requiring crypto operators to identify customers and report all suspicious digital currency transactions as detected, to the police.

Increased Compliance

Quoted in Japanese national daily, The Mainichi an NPA official explained that increased cooperation by crypto exchange platforms is the driving reason behind the increase in the reports of suspicious activity.

In his words:

“It’s already been some time since the reporting system began, and it has been embraced by the industry through guidance from the Financial Services Agency.”

It will be recalled that in April 2017, Japanese authorities introduced a regulatory regime for cryptocurrency exchanges mandating them to report any suspicious transactions as part of the Japanese government’s efforts to key into a wider global clampdown on asset laundering and illegal financial activities. Since then, regulators and law enforcement bodies in the country have incorporated suspicious activity reports from exchanges into their investigations.

In the Jiji Press report, it was revealed that by October 1, the Financial Services Agency had already registered 16 operators, with a further three undergoing the registration screening process.

On Thursday, the National Public Safety Commission released a report on the transfer of criminal proceeds, emphasizing the susceptibility of cryptocurrency transactions to abuse. NPA investigations into suspicious crypto transactions have found the following: reuse of the same face photo by several users with different names and birth dates, multiple trading accounts initiated from a single IP address, logins from overseas on accounts with Japan addresses, as well as registration of out-of-use mobile phone numbers. The activities associated with these transactions are not restricted to asset laundering but also reportedly include illegal drugs and child pornography.

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