Japan’s Financial Services Agency (FSA) is said to be scrutinizing cryptocurrency exchanges in the country to ensure anti-money laundering (AML) processes are in place.

A report from the Nikkei Asian Review on Wednesday, citing an unnamed FSA official, said that inspections are being carried out ahead of the G20 summit next month. The G20 – the international forum of which Japan holds the presidency for 2019 – is planning measures to crack down on money laundering using cryptocurrency and, hence, the country aims to ensure that it has its financial house in order, they said.

Adding to the pressure, global money-laundering watchdog, the Financial Action Task Force (FATF), will review Japan’s domestic money laundering laws this autumn – an investigation that will include cryptocurrency platforms.

Cryptocurrency exchanges are, therefore, being asked by the FSA to clearly explain what measures they are taking to prevent money laundering, such as verifying user IDs to prevent anonymous transactions.

Last month, cryptocurrency exchanges Huobi Japan and Fisco were reportedly investigated by the FSA to assess their customer protection and AML provisions.

The FSA official said in today’s report:

“We’ll continue with the on-site inspections, and we’ll make sure everything is sound.”

Japan is also trying to make improvements after receiving the FATF’s lowest rating for customer identification processes at financial institutions in 2008, the official added.

The FATF published a draft document earlier this year, proposing a number of measures that national governments should adopt to more effectively supervise cryptocurrency transactions, and therefore lower money laundering risks.

Japan has already been making moves to tighten up the crypto industry. The nation passed a law in April 2017 that brought cryptocurrency exchanges under AML/know-your-customer (KYC) rules and mandated that such platforms must be licensed. The law also notably recognizes bitcoin as a legal method of payment.

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