- There has been a 10x increase in crypto money laundering cases in 2018
- The money laundered is reported to be involved in illicit behaviors like the drug trade
- The National Police Agency in Japan has set a plan in motion to reduce crypto money laundering cases
On Feb 28, 2019, Japan Times reported that there had been more than 7,000 cases reported to the police suspected to be money laundering linked to cryptocurrencies, in 2018. This number is ten times higher than the cases reported in 2017.
Cryptocurrency exchange operators are now required to report any transaction they suspect to be connected to the movement of crypto illegally obtained money. This step has seen the number of alleged money laundering reports increase tenfold comparing with the period between April and December 2017 which was 669 cases.
High Rise of Crypto Fraud Activities in Japan
It is possible to transfer cryptocurrency quickly, anonymously and in large amounts, police stated that there had been cases where these virtual currencies were used for illegal drug trade and even child pornography.
A lot of discrepancies were found among the users of suspicious transactions. Some users shared the same photo ID, but with different names and birth dates, others seemed to be logging into their accounts from overseas yet their addresses were in Japan.
Among all 417,465 cases of suspected money laundering reported to the police in 2018 most of them involved banks and other financial institutions where they reported a total of 346,014 reports, others were the credit card companies which made for 151,44 reports. These cases have been on the rise from 454.043 reports the previous year.
Tackling the Situation
The National Police Agency has plans underway to train data analysis specialists and also artificial intelligence technology. This will help to identify drug trade and money laundering transactions and therefore be able to detect illegal movement of money and ultimately reduce the number of suspicious transactions.
In recent years as crypto gains popularity, Japan has witnessed many cases of fraudulent activities tied with digital currencies.
For instance, bitcoin worth ¥48 billion was stolen from Mt Gox; this was in 2014. Early last year ¥58 billion worth of NEM, a digital currency was stolen from a Tokyo-based currency exchange operator, Coincheck Inc customers’ accounts.
Financial Service Agency, the financial watchdog of Japan ordered a total of six digital currency exchange operators to improve their internal controls, and this was inclusive of measures being put in place to curtail money laundering.