The proliferation of cryptocurrencies has come with a few caveats. Sure, they represent a safer way to buy and sell assets, thanks to the blockchain support, but that does not mean that some shady people use them for illicit purposes.

Japan, most specifically its National Police Agency (NPA,) has a system in which it categorizes transactions by theirnature. This 2018 has represented a year in which operations qualified as “suspicious”have increased dramatically.

A Japanese news site recently reported that a considerable amount of suspicious cryptocurrency transactions were performed in the country. To be more specific, the number reaches 5,944 reports to authorities about suspected illegal uses of crypto assets, including frauds and money laundering, from January to October.

A Huge Jump Compared to last Year

The number is alarming, considering that last year; the cases that fell under that classification were only 669. According to thereport, the increase has been caused “after the implementation in April of alaw obliging the [cryptocurrency exchange] operators to make reports to thepolice if they detect dubious digital currency transactions.”

An NPA staffer is quoted as saying that the increase can be considered a positive development, since it points out to operators having become “widely aware of their reporting obligation,” in order to enhance the overall security levels within the industry.

“It’s already been some time since the reporting system began, and it has been embraced by the industry throughguidance from the Financial Services Agency,” the official is quoted as saying.

Japanese authorities are eager to combat the illicit use of cryptocurrencies, and are implementing several tools and approaches to achieve their goal. Among them is preventing tax evasion on substantial profits coming from crypto-related transactions.

Sources indicate that the Japanese government is continually looking to develop and promote a system that would allow theNational Tax Agency to gather data from crypto transaction intermediaries about people that use these assets.

Crypto exchanges would have to show compliance with regulatory norms, otherwise they risk losing their license to operate in the country. They will also risk the last scenario if they help tax evaders.

Only a Small Percentage of Money Laundering Cases are Related to Crypto

Japan has proven time and time again that it is among the nations with the most extreme stance on regulating the use of cryptoassets. The 5,944 reports on “suspicious” transactions is a high number. However, it is a minuscule figure if percentages enter the equation: it is equivalent to just fewer than 2 percent of money laundering cases in Japan, which are north of 340,000.

The FSA, which is the Financial Services Agency in Japan, is toying with the idea of tightening ICO (Initial Coin Offerings)regulations to help users be protected against potential scams and frauds that have become so frequent in these types of fundraising events.

There is another issue that complicates the police and regulators’ project, and it is the use of foreign accounts to perform crypto transactions and participate in ICOs.

By Andres Chavez


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