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Suspicious cryptocurrency trade reports jump 8-fold in first 10 mo. of 2018: NPA

A website showing how to use bitcoins is seen in this March 1, 2014 file photo. (Mainichi)

TOKYO -- Cryptocurrency exchanges in Japan reported 5,944 suspicious transactions to the authorities in the first 10 months of 2018, including possible money laundering, statistics released by the National Police Agency (NPA) on Dec. 6 showed.

The total is some eight times the 669 cases recorded in 2017 -- after new rules obligating exchanges to report suspicious trades entered into force in April of that year.

"It's already been some time since the reporting system began, and it has been embraced by the industry through guidance from the Financial Services Agency," an NPA official said of the reasons for the sudden increase.

Cryptocurrency trades are executed over the internet, and the transactions have a high degree of anonymity. If they are conducted using accounts in countries with lax oversight, the people behind them become extremely difficult to track. Japan's April 2017 introduction of the legal duty to report suspicious transactions was part of a wider global trend to impose countermeasures to prevent the trades from being used for illegal purposes. Japanese law enforcement has been actively using these reports in its investigations.

According to the NPA, suspicious activity in the reports include reuse of the same face photo by multiple parties, which must be submitted to identify users; multiple cryptocurrency trading accounts opened from the same IP address; and registration of out-of-use mobile phone numbers.

There have been real-world cases of cryptocurrencies being used for money laundering operations in Japan. In January of this year, Tokyo's Metropolitan Police Department (MPD) investigated three people using other people's credit cards to buy the popular cryptocurrency Bitcoin. The individuals would change the currency into Japanese yen via a trading account they held at a U.S.-based company, and then move the yen into an account opened using false ID.

As of Oct. 1, 2018, there were 19 cryptocurrency trading firms in Japan. The sites are being used not only for asset laundering, but also in transactions related to trade in illegal drugs and child pornography. There have been a number of alleged thefts involving extremely large sums of money.

(Japanese original by Toshiaki Uchihashi, City News Department)

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