The applicant is an exchange that has been suspended for 2 times from carrying out any activities and gained 2 business improvement orders.
The first time it has done so. The decision follows the ministry’s conclusion that Yokohama-based FSHO lacks the necessary systems to operate its business… By barring an exchange operator that it has found to be substandard, the agency aims to demonstrate its determination to re-establish a sound currency trading environment in Japan.
Nikkei Asian Review
FSHO is known as a “deemed dealer” or “quasi-operator” of cryptocurrencies in Japan, meaning it has been let processing a crypto exchange while its application with the FSA is being reviewed. In the March order, FSA suspended all of FSHO’s businesses towards cryptocurrencies from March 8 to April 7 and published the firm a business improvement order. According to it, the company was offered to correct 4 areas of operations such as to “Build a position to securely manage user information.” The measures taken were to be presented to the agency by March 22. In the April order, the agency again suspended all crypto operations of the company from April 8 to June 7 and issued another business improvement order.
This second order includes 5 business improvement areas, some of what were the same as those in the first order. Among new areas are the “Establishment of an effective management system including money laundering and terrorist financing” and a risk management system. The firm was to report the changes to the agency by May 7.
As reported by Nikkei Asian Review, the FSA found that "the exchange did not sufficiently verify the identity of customers in transactions where crime is suspected, or in cases where customer deposits may be diverted". The suspension period is to be completed on Thursday, after that the agency will block the exchange from operating and reject its registration.