The Growth of Transactions Suspicious for Money Launderings Using Cryptocurrency in Japan

The Growth of Transactions Suspicious for Money Launderings Using Cryptocurrency in Japan

The Japan Times published a report on February 28 about the increase of the number of suspected cases to money laundering via cryptocurrencies in 2018. According to this report, more than 7,000 suspected cases for money laundering related to cryptocurrencies have been reported to the police of Japan. These statistics indicated a tenfold growth of such cases compared to similar ones in a nine-month period in last year.

669 suspected cases had been reported to the police of Japan in 2017. Reporting transactions suspected of illegal money transfer through cryptocurrencies via brokerages became mandatory in 2017. A total of 417,465 suspected cases of money laundering in Japan financial transactions have been reported in 2018; which is, 17,000 cases more than 2017. Many of such cases were for financial and credit card companies.

To face the growth of such suspected cases, Japan’s National Police Agency (NPA) has planned to train data analysis experts and test artificial intelligence technologies to diagnose illegal trades. Last year, NPA funded ¥25 million to track suspected transactions in cryptocurrency brokerages in 2019. This budget will be spent on creating suitable technical software by the private sector in order to decrease the difficulties the police faces in fighting money laundering.

According to the police, speed and anonymity are two major reasons for applying cryptocurrency to transferring money in illegal trades such as child pornography and drug dealing. Among 7,096 suspected cases in this report, a number of users have done transactions with one phone, but different names and dates of birth and other users have done the same out of Japan while their addresses have been registered in this country.

Japan has observed huge Cyber-attacks in the field of cryptocurrency in recent years; the purpose of all of these attacks were the buyers of these digital assets. ¥48 billion has been stolen from Mt.Gox brokerage in 2104. In January of the last year, high amounts of NEM cryptocurrencies with the value of ¥58 billion have been stolen from Coincheck users’ accounts. Such incidents have been followed by extensive measures from the government in mandatory security implementation to protect people’s digital assets by brokerages.