The Financial Services Commission of South Korea (FSC) has demanded that local banks stop providing services to traders and trading platforms that do not comply with KYC and AML procedures.
According to the FSC, there are 60 cryptocurrency exchanges operating in the country today. Of these, only four are AML compliant using accounts with real names. Therefore, on June 9, the Financial Intelligence Unit of South Korea (FIU) held a meeting at which it stated that banks and financial institutions should classify cryptocurrency transactions as transactions with a high risk of money laundering. The agency urged banks to take additional precautions and more closely monitor financial transactions with the exchange of cryptocurrencies.
Under the Financial Information Act, cryptocurrency firms are required to report suspicious digital asset transactions to the FIU. Non-ID customers and exchanges that do not report suspicious activity to FIU will be denied banking services. Marketplaces will also have to reject transactions made by customers who have not gone through the identification procedure (KYC), or who do not use their real name.
FSC said that with a verified account, traders will be able to deposit and withdraw money from cryptocurrency platforms through a bank without any problems. This will make it easier to identify the user and get transaction details. If these requirements are not met, cryptocurrency transactions carry a greater risk of money laundering.
Earlier, the Commission demanded that, by September 24, virtual asset service providers (VASP) obtain permission from the regulator to carry out their activities in the country, as well as provide reports confirming their compliance with AML requirements. Later, the regulator said that consideration of all reports would be completed only by December 31st.
In May, many South Korean exchanges expressed fears that, due to stricter regulation, they would be forced to close or “move” to another jurisdiction.
