Japanese regulators lead the way on tackling cryptocurrency exchanges
Further to our November and December 2017 updates noting the rise of Japanese cryptocurrency regulation and the new requirement for submission of cryptocurrency operators to the financial services registration system, cryptocurrency exchanges continue to make Japanese headlines in 2018. The Japanese Finanical Servies Agency (FSA) has punished seven exchanges, ordering two to suspend business and imposing trading sanctions and business improvement orders on others in a drive to enhance consumer protection following the theft of US$530 million worth of "NEM" coins from Tokyo-based Coincheck Inc. earlier this year. These exchanges have been accused by the regulator of lacking proper/adequate systems for managing anti-money laundering/counter-terrorist financing (AML/CTF) risks. These exchange operators have been required to submit their improvement proposals to the FSA.
The FSA recently issued a warning to a Hong-Kong based cryptocurrency exchange Binance for operating in Japan without registration, as required under the new system. This follows a warning issued to Macau-based Blockchain Laboratory last month for operating as an initial coin offering agency in Japan without a licence.
Japan's new plea bargaining system will focus on corporate crime
The Japanese government has decided to introduce the right to plea bargain in a variety of criminal cases. These include bribery, bankruptcy, patents and organized fraud proceedings and violation of the Banking Act, the Money Lending Business Act and antitrust regulations. Under the revised law, prosecutors can agree not to seek indictment of a defendant, seek prosecution for less severe charges or demand more lenient penalties if a suspect or defendant provides evidence or depositions against partners in crime/accomplices. It is hoped that plea bargains will help the prosecution in cases of bribery and other offences, where it is often difficult to obtain evidence without having to rely heavily on the defendant's testimony. However, experts are concerned this will increase the risk of false testimonies being used to incriminate innocent individuals. This revised law will become effective on 1 June 2018.
Ube Industries, the latest Japanese manufacturer to admit a history of faking inspection reports
Following on from our updates in November and December 2017 relating to the falsification of data by Japanese manufacturers, materials maker Ube Industries has now disclosed that its plant site in Ichihara, Chiba Prefecture, had skipped quality-control checks for some of its low-density polyethene products since the 1990s. The products under scrutiny are used to insulate power and telecommunications cables. The company's president admitted that the company had not conducted the required checks and instead provided doctored inspection reports to meet clients' delivery specifications. Ube Industries says it began full quality checks in December 2017, upon detecting the problem.