The Financial Services Agency (FSA), Japan’s primary financial regulator, has clarified its stance on peer-to-peer (P2P) crypto transactions in light of its recent recommendations to local banks.
In a letter dated February 14th, the FSA urged banks to enhance user protection by halting transfers to crypto-asset exchange service providers if the sender’s name differs from the account name. This recommendation could potentially impact P2P transfers in the country, as these transactions often involve different users on the sender and receiver ends.
In response to an inquiry from Cointelegraph, the FSA clarified that its recommendation does not pertain to transactions between individuals. The scenario they provided as an example involves a fraudster (X) persuading a victim (Y) to deposit funds from their bank account into the fraudster’s newly created crypto account. To bypass the platform’s restriction on accepting deposits from different individuals, the fraudster would convince the victim to change their name to X. However, under the new recommendations, the bank would block the suspicious transaction if the sender requests a name change from Y to X for the purpose of depositing into the crypto platform.
The FSA stated that several financial institutions have already implemented these measures, but no reports of specific cases raising concerns over crypto asset markets have been received.
It should be noted that the FSA’s recommendations are not mandatory for all financial institutions. Banks are expected to assess their individual circumstances and decide on appropriate measures accordingly.
In a similar vein, South Korea is also taking proactive measures to combat crypto fraud. Its Financial Intelligence Unit plans to introduce a preemptive trading suspension system for suspicious transactions on platforms operating in the country. This system would freeze transactions even during the pre-investigation phase.
Overall, regulatory bodies such as the FSA and South Korea’s Financial Intelligence Unit are actively working to safeguard against fraudulent activities in the crypto space.