Japanese crypto exchange Minnano Bitcoin has received a business improvement order from Japan’s Financial Services Agency (FSA) for not abiding by compliance rules.
On Wednesday, the FSA said that the order was submitted after the agency conducted an on-site inspection of the exchange following the submission of a system risk management report. According to the FSA, they found that in addition to the insufficient effective management control system to ensure proper operation of business, Minnano was “not performing appropriate verification at the internal audit.”
“It [the exchange] also has the problem of preventing money laundering and terrorist financing, preparing and preserving statutory books, providing appropriate information to users, [and] effective control over system risks and outsourcers.”
In the business improvement order, the FSA listed five specific ways to ensure appropriate and reliable business operations, including building a business management system, establishing a management system related to money laundering and terrorist financing, creation of bookkeeping management system, construction of a management system related to user protection measures, and system risk and outsourcing management system. The exchange must comply and submit a written report by May 14.
Minnano Bitcoin is a wholly owned subsidiary of the publicly listed Traders Holdings Co. Ltd., which engages in forex and securities trading in Japan. It has three cryptocurrencies listed on its website: bitcoin, ether, and Bitcoin Cash.
“We take this administrative punishment solemnly and sincerely, [and will] establish a posture for the proper and reliable execution of the virtual currency exchange industry, regulate the virtual currency exchange trader and recover the customer’s trust with full power,” Minnano Bitcoin said in a statement.
Since the Coincheck hack in January, which led to the theft of more than $400 million in cryptocurrency, Japanese crypto exchanges have been scrutinized more heavily by the FSA. Last month, the agency issued month-long business suspension orders to exchange operators FSHO and Bit Station. The FSA alleged that FSHO “does not have a proper system to monitor trading and has not given training to its employees,” while a senior employee at Bit Station was found to have used customers’ bitcoin for the person’s own purposes.
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