The marketing of crypto exchanges abroad to Koreans will be blocked if they fail to comply with the new South Korean regulations. The country’s anti-money laundering agency has notified a number of overseas trading platforms that registration is required to provide services to Korean residents.
Korean Financial Intelligence Unit notifies foreign crypto exchanges about registration requirements
Access to overseas cryptocurrency exchanges can be denied and the platforms can initiate criminal investigations in South Korea if they fail to comply with the country’s new regulations for the sector. One of the most important requirements is registration with the Korean anti-money laundering agency, the Financial Intelligence Unit (FIU), by September 24th.
To remind them of their commitments, the FIU has sent a notice to 27 companies whose crypto trading operations target Korean nationals, the Financial Services Commission (FSC) said on Thursday, quoted by the Korea Herald. The regulations, passed earlier this year, also require exchanges to have information security certificates, but none of them have yet received one, officials said.
The commission stressed that foreign exchanges should cease operations in Korea from September 25 unless they register with the FIU. Unregistered activity will result in penalties, including up to five years in prison and a fine of up to 50 million Korean won (over $ 43,000). In a statement addressed to the parliamentary committee on national policy, the FSC stated:
Business activities of overseas cryptocurrency exchanges that target local customers without reporting to the Financial Intelligence Unit – an anti-money laundering unit under the Financial Services Commission – are illegal under the revised Law on Reporting and Use of Specified Financial Transaction Information.
Compliance deadline is approaching with few exchanges meeting new requirements
South Korea’s revised Special Fund Act came into effect on March 25, but will come into effect in September after a six-month grace period. Another of the updated regulations requires that cryptocurrency exchanges work with domestic banks in issuing real name accounts to their users. While the country’s four major coin trading platforms – Bithumb, Upbit, Coinone and Korbit – have partnered with commercial banks, hundreds of smaller exchanges are poised to close.
Korean banks fear exposure to money laundering, hacking, fraud and other crypto-related risks. According to the new rules, they are responsible for evaluating the transparency of a crypto platform and the possibility of criminal activity. Requests for exemption from liability for crimes committed by the crypto exchanges they work with were reportedly denied by Korean regulators earlier this month.
According to the Korea Herald, the FSC plans to send guidelines on the new regulations to overseas crypto operators offering services in the country. “If foreign cryptocurrency exchanges serve local customers with settlement in won currency, they must register with the FIU and comply with government guidelines on preventing money laundering,” FSC chairman Eun Sung-soo told lawmakers last week .
South Korea’s financial regulator is tightening its stance on overseas crypto service providers after authorities in a number of other jurisdictions, including Italy, Lithuania, UK, Japan, Germany and Poland issued warnings against Binance, the world’s leading digital asset trading platform. New regulatory measures in relation to the stock market range from the temporary suspension of business operations to stricter reporting requirements, notes the Korean daily, which reveals an increasing global crackdown on the market.
What do you think of the new South Korean regulations for exchanging cryptocurrencies? Do share your thoughts on the matter in the comments below.
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