Japan is suffering from a plague of money laundering, according to local news source The Mainichi.
The article talks of a case of a gang which controls almost 30 billion yen ($272.1 million) in capital. In February the gang moved only 130 million yen through the system, the smaller amount explained by increased government surveillance.
A member of the gang told the paper that it uses several exchanges and dozens of transactions to cover its tracks. He said that the money is processed by members of staff, usually Japanese engineers and students, who operate in bases all over Tokyo. Using equipment provided by the gang, money is converted to the anonymity-focused cryptocurrencies Zcash, Monero, and DASH. The final destination of the money is Russia, where collaborators switch it to fiat.
A senior official from the Financial Services Agency, Japan’s financial regulator, told Mainichi: “It’s a typical money laundering scheme. In a way, I’m not surprised. If you are going to do something illegal, then everyone knows to use the ‘three anonymous siblings.’”
Coincheck was the only Japanese cryptocurrency exchange that handled all three, but after 534 million dollars were stolen from customers in January the exchange was acquired by a major brokerage which promptly discontinued these coins.
The Japanese are fans of cryptocurrency, with 3.5 million people reportedly holding at least one. The country has been relatively accepting of the new industry on both private and governmental levels. 11 cryptocurrency exchanges were granted licences to operate in September 2017, at the same time that the South Korean government was making moves to restrict the industry.
After the Coincheck hack, the licensed exchanges joined together to form a self-regulatory body called the Japan Cryptocurrency Exchange Association.
The FSA has been looking for ways to disallow anonymous cryptocurrencies from operating in the country, exactly because they are too useful for criminals, and last month began enforcing a new law which requires cryptocurrency exchange users to confirm their identities. In fact, the country nearly threw a major international exchange out of its office in Tokyo because it suspected it of not complying with this requirement.
At the G20 summit this year, Japan urged other countries to work together to require cryptocurrency exchanges to disallow anonymous transactions. The FSA official told Mainichi: “It’s nearly impossible for Japan to handle the problem alone. Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G-20) would take the same steps toward prevention.”