Japanese Regulator Issues Business Improvement Order to Fisco

Earlier today, June 21, 2019, Japan’s Financial Services Agency (FSA) issued a business improvement order to crypto exchange operator Fisco.

The regulator issued the order with a report citing various rule violations on the part of Fisco’s management.

Fisco is the operator of Zaif, a Japanese exchange that was hacked in September 2018. Fisco has reportedly been under FSA’s microscope since the exchange changed management in April 2019. At the time, the regulators targeted Fisco alongside another local crypto exchange, Huobi Japan, and investigated both to ensure that they complied with customer protection and legal compliance standards.

According to the regulator’s report, Fisco’s management didn’t adequately recognize the importance of legal compliance. It will now have to improve its anti-money laundering (AML) and risk management systems. The exchange was also ordered to make improvements to its auditing, accounting and outsourcing.

The FSA also found shortcomings in the exchange’s customer verification infrastructure.

“In the section where users can enter identity verification information, they can select ‘other’ if it is not possible to check their occupation or purpose of the transaction,” FSA notes in its report. “When ‘other’ is selected, the account can be opened without entering anything.”