Japan FSA Clarifies Rules for P2P Crypto Transactions

Japan FSA has issued guidelines for P2P crypto transactions with banks advised to halt transfers to crypto exchanges if the names differ.

As a result of its most recent recommendations to local banks, the Japan FSA has provided clarification regarding its position on peer-to-peer (P2P) cryptocurrency transactions.

“Stop transfers to crypto-asset exchange service providers if the sender’s name is different from the account name,” Japan FSA wrote in a letter that was sent out on February 14th, encouraging financial institutions to “further strengthen their users’s protection.”

According to a report, this could potentially jeopardize peer-to-peer (P2P) transactions in the country because these transfers typically include two individuals on both the sender and the receiver sides.

“We issued the request with the aim of asking banks and other financial institutions to strengthen measures against unlawful money transfers in cases where an individual deposits cash from the individual’s bank account to an account of a crypto asset exchange service provider.”

Fraudster X requests that victim Y transfer money from their bank account to the newly established cryptocurrency account that the fraudster has in their possession.

The perpetrator convinced victim Y to change their name to X so that the cryptocurrency platform would accept the initial deposit made on their account by another individual. This is because the platform would not accept the deposit.

However, according to the new recommendations, the bank will decide to block the suspicious transaction at this stage. The sender requested changing his name from Y to X to deposit money into the cryptocurrency platform.

Japan FSA has stated that several different financial institutions have already implemented these safeguards. Nevertheless, the agency has not yet received any information on specific situations that would cause “concerns over crypto asset markets.”

The recommendations made by the Financial Services Authority “are not uniformly required” for all financial institutions. Banks must consider their circumstances and decide on specific actions accordingly.

Additionally, South Korea, Japan’s neighbor is taking preventative measures to combat cryptocurrency fraud. The Financial Intelligence Unit will implement a preemptive trading suspension mechanism to facilitate suspending suspicious transactions on platforms already operational within the country.

As a result of this, its Financial Intelligence Unit will halt transactions even during the preliminary investigation phase.