News Japan’s Biggest Crypto Exchange Halts New Account Signups As Regulators Demand Improvements
Wilma Woo | Jun 22, 2018 | 06:00
Japanese cryptocurrency exchange BitFlyer suspended new account registrations on June 21, after regulators demanded it improves its security arrangements.
BitFlyer Hit With AML/KYC Cleanup
A tweet and statement confirmed the move, which officials implemented as part of a Business Improvement Order from Japan’s Financial Services Authority (FSA). The statement reads:
We apologize to all concerned and the customers who have caused a great deal of worry and inconvenience due to this business improvement order.
BitFlyer joins a raft of Japanese exchanges which regulators have demanded change their business practices as part of an industry-wide cleanup following Coincheck’s $530 million hack in January.
【当社への行政処分に関するお詫びとお知らせ】
本日、当社は金融庁より資金決済に関する法律第63条の16に基づく業務改善命令を受けました。
今回の業務改善命令により多大なるご心配とご迷惑をおかけしたお客様ならびに全ての関係者の皆様に対し、深くお詫び申し上げます。https://t.co/s8kvdEX0BL— bitFlyer（ビットフライヤー） (@bitFlyer) June 22, 2018
While that industry is expanding at a blistering rate, extant operators have variously halted operations, received fines, or shut down completely after investigators reviewed their setups.
Demands Focus On Risk Management
BitFlyer’s order contains broadly similar requirements to that which Coincheck received following January’s exploit, including the mandatory submission of an improvement plan — which officials should submit by July 23.
The FSA identified a further eleven steps:
- Follow measures to ensure the proper and reliable operation of the business
- Immediate review of management system
- Establishment of a risk management system for money laundering and terrorist financing
- Establishment of a management system related to elimination of antisocial forces, etc.
- Establishment of a system for separating and managing user property and management of books and documents
- Establishment of a management system related to user protection measures
- Build a platform risk management system
- Establishment of a management system for the safe storage of user data
- Build a management system to respond appropriately to complaints and consultation from users
- Building a risk management system related to handling of new virtual currency
- Receive verification by a third-party organization regarding the appropriateness and effectiveness of the improvement contents of 1 to 9 above.
For users, the effect of the changes may manifest in the need to resubmit identification documents or provide additional ones.
While Japan has yet to see another exchange hack, South Korea became the latest victim of malicious attacks this week when its largest exchange, Bithumb, confirmed the loss of around $30 million.
What do you think about BitFlyer’s AML/KYC obligations? Let us know in the comments section below!
Images courtesy of Twitter/@bitFlyer.
