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Japan FSA Commands “Fisco” To Improve Internal Management System & Respect Legal Compliance

Fisco-Tokyo, Japan-based Investment management firm is required to follow the commands by Financial Services Agency (FSA) towards the improvement in the business management practices. The latest information through a press release by FSA, published on June 21, referring as an “administrative disposition.”

Reportedly, earlier this year on February 13, the FSA during its investigation process over FISCO Virtual Currency Exchange, Inc. (Head Office: Kishiwada, Osaka Prefecture) has discovered that there is a “lack of upright management system” and “obligation of legal compliance in the organization is missing.” Following the onsite investigation, the authority has issued a task improvement order to Fisco.

Zaif Cryptocurrency Exchange, Bitcoin (BTC), Monacoin (MONA), and Bitcoin Cash (BCH)

FISCO Ltd. is a business investment support services firm which acquired Zaif cryptocurrency exchange in April 2019, after the infamous hack that took place in September 2018, and resulted in the loss of 40$ million worth of cryptocurrencies which were stolen from users’ hot wallets, while an additional $20 million was hacked from the company itself. Allegedly, most of the losses incurred in the form of Bitcoin (BTC), in addition to some Monacoin (MONA) and Bitcoin cash (BCH) was also taken.

As per the information, the internal management neither following the norms and nor discussing the crucial issues like the company’s business plan. There are also some concerns over the “risk management system- for money laundering and terrorist financing, and the external management system such as “outsourcing management system.”

As per available data, the financial watchdog has found the number of “legal violations” and “non-fulfillment of obedience” by the firm. With the aim of streamlining the flawed practices, while ensuring “the proper and reliable management system,” there are following mandatory measures that the overseers want Fisco to follow and “report the authorities on a regular basis.”

FSA and Virtual Currency

The press release notes- “Based on the provisions of Article 63-16, of the Act today,” FSA has issued a task improvement order while conveying the important rules to be followed on. The agency ordered the firm to establish clear functions for the internal and external management departments including the auditing department, construction of legal compliance practices, building of risk management system to curb the issues related to money laundering and finance terrorism with regards to virtual currency, creation of outsourcing management system and book document management system are among others. 

In addition to the creation of various unfulfilled and unrecognized legal practices, which the firm supposed to follow earlier, FSA also directed FISCO to submit the “aforementioned work improvement plan in writing by July 22, 2019, and until then it is important to keep on updating the authorities about the on-going progress of the  commanded “implementation of the work improvement plan” every month.

Tags: Japan, Financial Services Authority (FSA), Management System, Compliance Management, Fisco, Cryptocurrency Exchange, Cryptographic Assets, Virtual Currency, Zaif, Bitcoin (BTC), Monacoin (MONA), Bitcoin Cash (BCH), Article 63-16.