Japan’s FSA takes action against FISCO Cryptocurrency Exchange
An inspection at the premises of the Exchange has revealed a set of law violations, including ones concerning business management.
The Japanese authorities have once again demonstrated that they take law compliance of virtual currency exchanges seriously.
Japan’s Financial Services Agency (FSA) today announces an administrative action against FISCO Cryptocurrency Exchange (Corporate Number 1120101054642). The action follows an onsite inspection conducted by the Japanese authorities at the offices of the Exchange in February this year.
The inspection has revealed a set of law violations by the company concerning its business management. For instance, the Board of Directors did not discuss important management issues such as business plans. There were also problems with the risk management system for anti-money laundering and terrorism financing, and the external management system concerning outsourcing.
The FSA is issuing a business improvement order to the company. FISCO Cryptocurrency Exchange will have to establish a sound management system, which can guarantee the full operations of the internal management department and the audit department. Further, the company will have to establish a risk management system for anti-money laundering and terrorism financing, as well as an outsourcing management system.
The company will also have to develop and put in place a management system for the safety management of user information.
A business improvement plan will have to submitted in writing by July 22, 2019.
The number of enquiries about crypto assets (virtual currencies) has significantly decreased in Japan over the past several months, as indicated by a recent FSA report. This number amounted to humble 574 in the quarter to end-March, compared to 788 in the preceding quarter. Apparently, the hype around cryptoassets has markedly subsided.
Last year saw tightening of the regulatory environment for virtual currency exchanges in Japan. There were a number of business improvement orders issued. GMO Coin, the virtual currency business of GMO Internet Inc. (TYO:9449), was among the companies targeted by such orders. GMO Coin was instructed to establish an effective risk management system.