The penalty for not complying with the order includes a three-year imprisonment.

The Financial Services Agency (FSA) of Japan, its top financial regulator, has banned crypto exchanges from transacting assets sanctioned by the West in response to Russia’s aggression against Ukraine. The FSA has been authorised by the Japanese Cabinet to take various retaliatory measures including imposing restrictions on payments under the country’s Foreign Exchange and Foreign Trade Act. (Bitcoin.com)

Japan’s action is in line with the tough stand taken by the G7 nations along with the US and EU to crack down on the use of crypto by Russia to evade sanctions. A joint statement says:

“In addition to other measures planned to prevent evasion, we will ensure that the Russian state and elites, proxies, and oligarchs cannot leverage digital assets as a means of evading or offsetting the impact of international sanctions, which will further limit their access to the global financial system.”

Tough penalties

Accordingly, Japan has prohibited crypto exchanges from making any payments to sanctioned persons with ties to Russia and Belarus.

There are 30 crypto exchanges registered in Japan, and they could face penalties of three years’ imprisonment and/or a fine of not more than 1 million yen ($8,481) for violating the FSA’s diktat.

Nabbing sanctioned crypto transactions

On a side note, Chainalysis, a leading blockchain/crypto monitoring and data platform, has said it is building tools to make it easier for any organization to integrate sanctions screening for cryptocurrencies into their existing operation.

Chainalysis’ primary objective is to build these tools for Defi, DAOs etc who may not be as sophisticated in their surveillance as VASPs (virtual asset service providers) which already have monitoring mechanisms in place including AML/KYC procedures that can thwart sanctioned individuals.

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