The Japanese Financial Services Agency to Align with Global Sanctions Efforts Against Russia

The top Japanese financial regulator, the Financial Services Agency (FSA), has urged cryptocurrency exchanges operating out of the country to not process transactions flagged as frozen or sanctioned.

The financial regulator made the announcement yesterday, adding that Japan will support international sanctions efforts on Russia following its invasion of Ukraine.

The FSA also noted that the Cabinet had bestowed upon it the mandate to implement “various measures including payment restrictions under the Foreign Exchange and Foreign Trade Act.”

The financial watchdog added that the FSA and the Ministry of Finance have instructed crypto exchanges in the country to not process sanctions-tied transactions linking to Russia and Belarus, detailing:

“All payments, including payments by crypto assets, cannot be made to sanctioned persons without prior permission.”

The Financial Services Agency to Jail and/or Fine Defaulters

That said, the FSA added that there are steep penalties for defaulters of the new rule, detailing that offenders could face a three-year imprisonment charge and/or a fine of not more than $1 million.

The new mandate comes shortly after a statement from the Group of Seven (G7) countries last Friday on sanctions against Russia. According to Reuters, a senior FSA official noted:

“We decided to make an announcement to keep the G7 momentum alive … The sooner, the better.”

The FSA and the Ministry of Finance of Japan both announced in a joint statement that the Japanese government would pool its efforts to strengthen measures put in place to prevent fund transfers through crypto that could contravene global sanctions efforts.

At the moment, there are thirty crypto exchanges registered under the FSA-recognized list in Japan, according to the regulator’s website.