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All virtual asset service providers (VASPs) are subject to anti-money laundering (AML) regulations. The Japanese Regulator uses the term crypto-asset exchange service providers (CESPs), defined as: entities engaged in any of the "following as a business: 1. sale and purchase of crypto assets or exchange of crypto assets for other crypto assets; 2. intermediary, brokerage, or delegation for the acts listed in (1) above; or 3. management of users' money in connection with the acts listed in (1) or (2) above; 4. management of users' crypto assets for the benefits of another person (custodian services)" (Request for Notification of Originator and Beneficiary Information upon Crypto Assets Transfer, Travel Rule, section 2).

In March 2021, the Financial Services Agency (FSA) issued guidelines to the Japan Virtual and Crypto Assets Exchange Association (JVCEA) where it stated "we understand that your association is also considering the introduction of self-regulatory rules regarding notification of crypto assets transfer (i.e. the Travel Rule ) by April 2022. From the perspective of ensuring the proper and secure conduct of crypto-asset businesses, we request that CESPs promptly proceed with consideration to the appropriate implementation of the notification of information associated with crypto assets transfer (i.e. the Travel Rule) in order to solve technical and operational challenges, and swiftly establish a regime" (Request for Notification of Originator and Beneficiary Information upon Crypto Assets Transfer, Travel Rule, section 2). 

No details were given as to what it would look like.

Supervisory body

Financial Services Agency (FSA)

Japan Virtual and Crypto assets Exchange Association (JVCEA)

Japan Security Token Offering Association (JSTOA)

Threshold

At the time of writing, unknown - however, we can imagine that Japan will follow the FATF recommendations.

Information to be exchanged

At the time of writing, unknown - however, we can imagine that Japan will follow the FATF recommendations.

When do you need to comply?

According to the FSA requests to the JVCEA, the latest is expected to have set up "self-regulatory rules regarding notification of crypto assets transfer (i.e. the Travel Rule ) by April 2022". 

What else do you need to know?

VASPs have to be registered with the FSA. 

In Japan, VASPs are more commonly referred to as crypto-asset exchange providers (CESPs).

Applicable regulation

Request for Notification of Originator and Beneficiary Information upon Crypto Assets Transfer (the Travel Rule )

Act on Prevention of Transfer of Criminal Proceeds and the Guidelines for Anti-Money Laundering and Combating the Financing of Terrorism

"Cabinet Office Ordinance on CryptoAsset Exchange Service provider"

Payment Services Act

Guidelines for AML and CFT

Written by:
Delphine Forma
Delphine Forma
Senior Compliance Manager at BitMEX

Delphine Forma is an experienced compliance officer who worked across different industries including Bank of Tokyo, Mitsubishi UFJ, HSBC Bank, and crypto businesses (exchanges and miners). She holds a diploma from Sciences Po Lyon, and two masters specialising in European Criminal Business Law and Frauds and Money Laundering Prevention. Delphine is a board member of the OpenVASP Association.

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