The SBIVC coin will comply with the Financial Action Task Force (FATF) guidelines on dealing with money laundering and terrorism.  The CEO of SBI BITS, a subsidiary of SBI Holdings essentially explained the position at the virtual currency summit V20. Notably, this summit is on in Osaka, Japan. The goal of these guidelines is to effectively minimize fraudulent capital transfers using virtual currencies.

About SBI and SBIVC

SBI Holdings is a large Japanese financial with many subsidiaries to effectively facilitate operations. This includes the SBI securities company which is the largest online securities company in Japan. This is because the company has more than 4 million brokerage accounts, an impressive number.

Notably, SBI Virtual Currencies (SBIVC) is part of the XRP ecosystem. This essentially means that it is front and center in the transactions business. This exchange offers transparency and legitimacy to the cryptocurrency exchange business.

At the moment, SBI has registered SBIVC with the Financial Services Agency as a virtual currency registrar. Accordingly, the exchange has been conducting trading operations since the summer of last year.  The CEO, Mr. Chon, made the point clear that the company is keen to prohibit illegal activities like money laundering.

Why Compliance Is Important

The FATF has recently guidelines to govern the illicit use of cryptocurrency. As such, members of the FATF will seek to regulate cryptocurrencies within their jurisdictions.  Exchange services are a critical part of the asset transfer process and entities like SBIVC will need to enforce the AML and effective prevention of terrorism funding.

Chon stated the importance of customer identity verification KYC. This is because many terrorists and criminals and terrorists can use cryptocurrencies to facilitate illegal ends. As such, services like SBIVC and other mixer services need to ensure they verify their customers.

KYC Enforcement

SBIVC has made it an option to first open an SBI Bank account and then open a customer account for SBIVC. According to Chon, this will ease SKY’s KYC and the fraudulent remittance detection system.  Accordingly, SBI Bank and SBIVC’s KYC system can detect virtual currencies likely to further illegal ends. SBI has an excellent method for dividing the suspicion of fraud by degree and score.

The system can effectively reject deposits into the SBIVC account is it gets flagged for fraud. This depends on the score of risk. Moreover, SBIVC uses a novel whitelisting mechanism to detect hacked funds and money laundering. 

The advantages whitelisting are in: confirming customer’s withdrawal request with customer’s ID proof, preventing hacking money transfer, preventing money transfer to FATF sanctioned countries and generally detecting fraudulent transactions. According to Chon:

 “When dealing with a virtual currency like traditional financial instruments, it is naturally necessary to comply with the rules of traditional financials” 

Generally, pursuing strict regulations and innovation simultaneously is an excellent trajectory for SBIVC. This is because cryptocurrencies have long had the reputation of being a wild west with no order. The essence of regulation is to ensure that cryptocurrency has the legitimacy it essentially needs to participate in mainstream finance.

 SBIVC is operation in a relatively crypto-friendly jurisdiction and this is a measure to truly capitalize on that market. It will definitely be interesting to follow how other major coin platforms will cope with the FATF rules.