South Korean Government Seeks Direct Supervision Over Cryptocurrency Exchanges
The South Korean government wants to bring crypto exchanges under the supervision of South Korea’s Financial Intelligence Unit (FIU). This is the first time a state-run agency has said it will supervise cryptocurrency exchanges. The move will obligate South Korean crypto exchanges to adopt anti-money laundering directives.
An Anti-Money Laundering Policy Advisory Committee meeting was recently held by the FIU to discuss potential measures that could combat money-laundering and other activities funding terrorism.
Maeil Business, a South Korean media outlet, explains:
This is the first time government agencies have said they will oversee virtual currency exchanges…When the bill is passed, virtual currency exchanges will be obliged to monitor the suspicious money-laundering transactions and report them to the FIU.
In the current scenario, FIU has no direct control over crypto exchanges since crypto assets are not recognized as financially assets by the law. The regulators have to monitor all illegal activities like money-laundering, through banks.
However, if proposed changes get approved, crypto exchanges will have to compulsorily comply with these obligations, and if they don’t, the FIU will be able to inspect their monitoring system.
According to the Hankyoreh, the Financial Supervisory Service (FSS) said that it is soon going to tighten its oversight of the domestic banks that provide crypto exchanges a virtual account. For example, the banks need to report any suspicious transactions that could possibly lead to money laundering, to the FIU. Deposits exceeding 10 mln won per day and 20 mln won over a period of 7 days have to be reported to the FIU.
Recently, many of the South Korean crypto exchanges have been implementing AML (Anti-Money Laundering) measures to combat illegal activities.
Bithumb, one of the largest South Korean exchanges, introduced some strict AML measures last month. The exchange blocked trading in 11 countries while also tightening the verification process for foreign clients. The withdrawal limits were also lowered for users failing to complete the verification process.
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