Bitflyer, Japan’s largest crypto exchange, has contested reports that the country’s financial watchdog, the FSA (Financial Services Agency) has declared its user verification processes insufficient. The company has, however, admitted that it’s talking to the agency and is currently implementing additional measures.
There have been reports making rounds in the media that the FSA asked the crypto exchange to tighten its user verification procedures after finding them to be wanting. A local media outlet, Nihon Keizai Shimbun, last week reported that even with inadequate identity verifications, customers could trade digital currency at Bitflyer, which is not the case for many other crypto exchanges in Japan. The Japanese law requires customers to mail verification documents to an exchange. This part of the KYC (Know-Your-Customer) requirements.
While it takes a normal dealer between 1-3 weeks from opening an account to trading, the Nihon Keizai Shimbun pointed out that at Bitflyer, trading can be done within 24 hours. Because speculators usually try timing the markets and making profits before the prices drop, “exchanges that can start trading the earliest are often attractive,” the news outlet conveyed.
The crypto exchange contested the report quickly, saying that “the contents in the media report are not factual,” adding that “the firm has implemented various measures like anti-money laundering…and has held discussions with concerned authorities.”
The crypto trading platform also clarified that the discussions held with the Financial Services Agency are healthy, and insisted that “we’re strengthening counter-measures as part of our most critical management issues across the company.”
Currently, the financial regulator has actively been carrying out inspections on crypto exchanges, especially those it has allowed to operate pending review of their applications for registration. So far, only Tech Bureau and GMO Coin have received business improvement orders from the FSA.
Strengthening user verification processes
In a statement, Bitflyer said that before offering customers its trading services, the company asks them to provide personal information, occupation, transaction purposes, and PEPs (for customers that occupy important government positions in foreign countries), among other necessary information. All users, the company says, also have to submit identification documents by mail.
“We offer services only after confirming the identification materials…if we notice an error or some inadequacy; we will not start service provision. Again, in case the address provided is found unknown, purchase and sale transactions are immediately limited,” Bitflyer clarified.
The exchange went on to detail about its unauthorized IP addresses and its fraud prevention measures for withdrawals in Japanese yen to bank accounts. Countries with such “risks as terrorist financing and money laundry are often subject to very strict vigilance,” the firm explained adding that “we’ll make strict verification processes by tightening our user support systems in the future.”
Despite denying the media reports, the Japanese crypto exchange announced various changes “after consulting with the FSA.” Effective 26th April, the company won’t allow users to withdraw Japanese yen or send cryptos until their addresses and identities have been confirmed. Also, buying high-value goods with BTC via the exchange will only be possible after it has received a user’s registered mail.
