Japan's Financial Watchdog Sends Improvement Orders to Six Crypto Exchanges

Japan’s Financial Watchdog Sends Improvement Orders to Six Crypto Exchanges

FSA (Financial Services Agency), Japan’s financial watchdog, has sent business improvement orders to six crypto exchanges operating in Japan, according to an announcement made by the agency on Friday.

According to the press releases on FSA’s official website, the agency has demanded a risk management overhaul – focused on AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements – from six crypto exchanges. The regulator has ordered BTC Box, Tech Bureau, Bit Point, QUOINE, bitFlyer, and Bit Bank, to focus on enhancing their user-protection systems and internal-audit.

As a result of this, bitFlyer, the 23rd largest exchange in the world by trade volume, has announced that it has already begun to take remedial measures and has stopped accepting new users temporarily. The exchange is currently examining user identification documentation of certain users.

The FSA said that in bitFlyer’s case, a proper management system has not yet been established to efficiently manage business operations, as well as AML measures and countermeasures for terrorist financing.

Responding to the statement made by the FSA, the crypto exchange was apologetic to its users, saying it is ready to carry out the improvement order, which also requires the exchange to submit a progress report to the financial regulator by July 23. Until the exchanges are able to meet the regulator’s requirements, they need to continue filing additional reports every month. The officials said:

“We apologize to all concerned and the customers who have caused a great deal of worry and inconvenience due to this business improvement order,”

The order comes after on-site inspections conducted by the agency over the recent months. The FSA conducted inspections at licensed crypto exchanges in April as part of its new policy which began following Coincheck’s $530 million hack in January this year.

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