Administrative guidance from South Korea’s Financial Services Commission (FSC) regarding crypto exchange regulations has been extended until the end of the year.
The validity period of the FCS’s ‘Virtual Currency-Related Money Laundering Prevention Guidelines’ extended from July 9 until December 31. This guideline requires banks and other financial companies to carefully monitor financial transactions on virtual currency exchange.
This entails financial companies classifying cryptocurrency-handling businesses as high risk for money laundering. This then necessitates a further strengthening of customer identification and financial transaction monitoring.
FIU requirements for crypto exchanges
According to the Specific Financial Information Act, financial companies are obliged to report suspicious transactions to the Financial Intelligence Unit (FIU). If customers refuse to verify their identity, financial companies should reject those transactions.
An FIU official explained, “When a virtual asset operator (virtual currency exchange) completes a report, it is managed by the Financial Services Commission, but before that, there may be areas where it is difficult to apply the revised Special Act, so we must consult guidelines.”
Virtual currency exchanges must submit a report to the FIU by September 24 demonstrating they meet requirements. These include real-name verification for accounts opened as well as information protection management system certification. After reporting, they are subject to supervision and inspection by the FIU. The FSC expects that the virtual asset business reporting process will be completed by the end of the year. This is because it takes about three months to review the report.
Requirement of real-name verified accounts
Many virtual currency exchanges are expected to go out of business without meeting the reporting requirements under the Special Act. According to the FSC, as of May 20, there are about 60 virtual asset exchanges in operation. Of these, only four are currently operating with real-name verified accounts issued by banks. It is for this reason that the FIU held a meeting of inspection entrusted organizations on June 9. At this meeting, it declared its intention to strengthen the monitoring accounts of virtual asset operators that do not use real-name verified accounts.
A real-name verified account is a service that allows deposits and withdrawals only between a verified trader’s bank account and the same bank account on a virtual currency exchange, making it easy to identify user identity and transaction details. According to the FSC, an account that is not a real-name verified account has a greater risk of money laundering.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
