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Japan Suspends Two Crypto Exchanges for Insufficient KYC Pro...

Japan Suspends Two Crypto Exchanges for Insufficient KYC Procedures

Japan’s financial regulator has ordered two cryptocurrency exchanges in the country to halt their operations for two months due to insufficient know-your-customer (KYC) procedures.

Effective immediately, the temporary ban will last until June 5 and June 7, respectively, for Eternal Link and FSHO, according to two administrative penalty orders issued by the Financial Services Agency (FSA) on Friday.

Through its months-long inspection, the agency alleged the two operators for lack of actions in mandating its customers for providing information such as trading purposes and implementing procedures in reporting suspicious transactions to the agency. The insufficient efforts in anti-money laundering does not comply with the Act on Prevention of Transfer of Criminal Proceeds, the agency said.

Separately, the penalty order to Eternal Link also indicates that the firm has violated laws in Japan by using deposits from customers to pay for company expenses, even just temporarily.

In addition, Eternal Link, FSHO, as well as a third exchange from Japan, Last Roots, were all found with insufficient improvement on their internal safety measures that guard user information against potential cyber risks, the FSA said.

The latest round of administrative penalties mark the continuous scrutiny by the Japanese regulator over the domestic cryptocurrency industry.

In fact, the new letter sent to FSHO follows a previous suspension order already addressed to the firm from the FSA on Mar. 8. At the time, another exchange, Bit Station, was also ordered to halt its operation while five others were mandated to report back to the FSA regarding business improvement measures.

As reported before, the FSA has been stepping up its effort in inspecting domestic cryptocurrency exchanges regarding their business operation loopholes after the heist has previously stolen $500 million worth in the NEM token from Coincheck.

FSA image via Shutterstock

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