Revolut needs to address AML lapses, says Japanese regulators

abdelaziz Fathi

The Kanto finance bureau of Japan’s Ministry of Finance (MoF) on Friday issued a business improvement order for Revolut to improve its AML compliance.

Revolut

The order came after the Japanese watchdog conducted an on-site inspection of Revolut Technologies Japan. The raid found “serious problems” in the challenger bank’s internal control for governance, management of outsourced contractors, as well as money laundering and terrorist financing risk management.

The agency went on to say that Revolut’s safeguards against money laundering contain holes that can be exploited by criminal organizations and terrorist groups. The Japanese subsidiary also failed to create sufficient governance for offering funds transfer services properly and consistently.

Japan’s regulator added that Revolut, which is valued at $33 billion, did not correctly and consistently examine the core services, such as money transfer services, that it outsourced to its London-based parent.

Moreover, Revolut Japan did not implement adequate checks on customers’ purpose of transaction and lacked a robust transaction verification mechanism and there were no guidelines for detecting suspicious transactions.

The statement further reads: “The Company outsources a large part of its main services, such as verification at the time of transaction, to Revolut Ltd, its parent company. However, the Company did not check how the outsourced services were actually operated; for example, the Company did not know that the outsourced services were further outsourced to subcontractors, even multiple times (e.g. to sub-subcontractors). In addition, the Company did not verify whether the contractors operate the outsourced services in a proper and steady manner, and thus it did not provide guidance to the outsourcees or take other necessary measures to ensure the proper and steady operation of the services as provided in Article 50 of the Act.”

Revolut, which bills itself as a ‘digital banking alternative’, launched its app and service in Japan back in 2020, which marked its first leap into a non-English speaking market.

Japanese authorities have been already preparing new restrictions that would bring crypto service providers, including Revolut, under the purview of its Foreign Exchange and Foreign Trade Act.

For this purpose, a representative to the country’s cabinet said that the government plans to introduce a bill to revise its foreign exchange and trade law to include crypto exchanges. Under this new proposal, crypto exchanges will act like regular banks in a sense that it would be obliged to verify and flag suspicious activities, including transactions related to sanctioned countries.

According to officials, unauthorized payments to sanctioned entities or individuals, even with digital assets, whether NFTs or crypto, will attract punishment.

This compliance aims to tackle concerns that oligarchs in Belarus and Russia may resort to crypto to avoid the financial sanctions imposed over Ukraine invasion.

Available information shows that many Russian entities and individuals are looking to liquidate their assets to acquire properties in crypto-friendly regions, like the UAE, through crypto.

 

Read this next

Institutional FX

OpenYield launches “cheap and easy” fixed income trading for brokers

“We’re on a mission to make bonds cheap and easy to trade, and are excited about the opportunity to build generational capital markets infrastructure.”

Digital Assets

Sumsub and Mercuryo publish a guide for VASPs: “Mastering Travel Rule Compliance”

“At Sumsub, we’ve concentrated our efforts on filling the gap in understanding the complexity of Travel Rule regulation and helping organizations find the best solution to stay safe and compliant while minimizing costs and avoiding potential risks of non-compliance. This guide we created with Mercuryo, our trusted partner, is the ultimate navigation tool all VASPs can consult.”

Digital Assets

Bitget Wallet Leads with Record Swap Volume & New Crypto Innovations

This week, Bitget Wallet achieved a milestone by surpassing Metamask with a record 388,757 Swap order transactions, securing the global lead. The significant 7-day trading volume, almost 68,000 more than its rival, underscores its liquidity and user trust. This robust activity signals Bitget Wallet’s prominent role and reliability in the dynamic crypto market.

Digital Assets

Embarking on a Digital Currency Journey

Imagine you’ve stumbled upon a treasure map, leading you to untold riches hidden in the vastness of the internet. Instead of gold coins and jewel-encrusted goblets, this treasure comes in the form of digital currencies, the modern-day loot coveted by many.

Reviews

Traders Union Experts Share The Trading Analyst Review For 2024

Navigating options trading in rapidly shifting markets poses a considerable challenge. This is where options trading alert services become invaluable. They aid traders in keeping abreast of evolving opportunities and market trends. In this assessment, Traders Union experts scrutinize The Trading Analyst alert service to ascertain its efficacy. 

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

Digital Assets

US, UK probe $20 billion Tether transfers tied to Russian exchange.

U.S. and UK authorities are investigating the movement of $20 billion in the USD-pegged stablecoin tether (USDT) through Moscow-based exchange Garantex.

Digital Assets

BlockDAG Presale Raises $9.9M as Batch 5 Nears Sell-Out Amid Bonk’s Fluctuating Trading Volume & Spell’s Bullish Price

Explore BONK’s trading volume, SPELL’s market shifts, and why BlockDAG’s 10,000 ROI makes it an ideal crypto for savvy investors in 2024.

Digital Assets

Bybit expands into Europe amid regulatory scrutiny

Dubai-based cryptocurrency exchange Bybit is expanding its operations in Europe after encountering regulatory challenges in Hong Kong.

<