Japanese Credit Agencies To Monitor Use of Cryptocurrencies for Illicit Activities

In the last few months, regulatory bodies in Japan have ramped up measures to prevent and prohibit the illicit use of digital currencies. Last week the Japanese government initiated a crackdown on some anonymous cryptocurrencies like ZCash, Monero, and Dash. In a further step, the government has now considered appointing several credit agencies to evaluate the digital currency users and monitor them.

The Japanese government will be working in close collaboration with the Japan Credit Information Service, credit agencies and information security research firms which together will be investigating suspicious trading accounts and individuals which are seen performing a large number of transactions worth huge amounts in short time.

The pressing need of tapping and scrutinizing the local cryptocurrency market arrived after multiple reports of Yakuza, the biggest criminal syndicate in the country has been alleged to be using digital currencies to launder millions of dollars on a regular basis. The Japanese authorities also suspect some individuals being involved of illicit activities funding terrorist organizations. Crypto accounts of such individuals are likely to be scrutinized along with their social media presence and credit scores. The credit rating agencies along with the local financial authorities will be having a close watch on this.

Yizumi Nobuhiko, the chairman of Japan Credit Information Service, said: By providing the personal information of suspicious individuals including credit scores and financial data, the government hopes to protect investors and improve the security of the cryptocurrency industry.”

On the other hand, the credit agencies will also see to it that there is no leakage of sensitive information and will monitor suspected individuals only after some concrete evidence and basis.

Last week itself, the Japanese regulatory watchdog - Financial Services Agency (FSA) initiated a crackdown on six major exchanges asking them to further enhance and tighten their Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures. During the investigation, the FSA also slapped the country’s biggest crypto exchange bitFlyer with charges calling its KYC and AML procedures to be not sufficient to prevent issues of money laundering. As a result, the FSA has asked bitFlyer to suspend new registrations until it overcomes this issue temporarily.