Japan’s Financial Services Agency (FSA) has provided clarity on peer-to-peer (P2P) crypto transactions following recent recommendations to local banks, emphasising the importance of enhanced user protection measures.
Recommendations on P2P Crypto Transactions by the FSA
In response to concerns about potential fraudulent activities in the crypto sector, Japan’s FSA has issued recommendations to local banks to strengthen user protection measures. On February 14, the FSA urged banks to increase their scrutiny of transactions involving crypto-asset exchange service providers, particularly emphasising cases where the sender’s name differs from the account name.
Clarification from the FSA
In a statement addressing inquiries from Cointelegraph, the FSA clarified that its recommendations do not extend to individual transactions. The agency stressed that its focus is on preventing unlawful money transfers, especially when individuals deposit cash from their bank accounts into accounts associated with crypto asset exchange service providers.
Impact on P2P Transfers
While the FSA’s stance aims to combat illicit activities, it may inadvertently affect P2P transfers in Japan. Typically, such transfers involve distinct users on both the sender and receiver ends. However, the new recommendations raise concerns as they could hinder transactions where the sender and account name do not match.
Purpose of FSA’s Directives
The FSA’s directives aim to thwart fraudulent schemes orchestrated by malicious actors who exploit discrepancies in account names to facilitate illicit transfers. For instance, fraudsters may persuade victims to change their names to the fraudster’s identity to bypass platform restrictions on accepting deposits from third parties.
Implementation Flexibility
It’s worth noting that the FSA’s recommendations are not universally mandated across all financial institutions. Banks are expected to evaluate their circumstances and adopt appropriate measures to address potential vulnerabilities in their systems.
Efforts in South Korea
Meanwhile, Japan’s neighbour, South Korea, is also intensifying efforts to combat crypto fraud. The country’s Financial Intelligence Unit plans to introduce a preemptive trading suspension system for suspicious transactions on platforms within its jurisdiction. This initiative aims to freeze transactions during the pre-investigation phase, enhancing regulatory oversight in the crypto realm.
