South Korea Tightens Noose on Cryptocurrency Exchanges with AML/KYC Rules
In an effort to curb money laundering and other illicit activities, South Korean authorities are intensifying their grip on cryptocurrency exchanges. With the country’s lawmakers pushing to amend the Act on Reporting and Use of Certain Financial Transaction Information (Ruftia), which governs anti-money laundering (AML) and know-your-customer (KYC) rules, these exchanges will soon be required to adhere to stricter regulations.
Proposed Amendment to Ruftia
The proposed amendment aims to bring cryptocurrency exchanges under the purview of AML/KYC obligations by deeming them as financial institutions. This move is intended to prevent exchanges from being used for illicit activities such as money laundering and terrorism financing.
Key Changes
- Cryptocurrency exchanges will be considered financial institutions, subjecting them to AML/KYC regulations
- Exchanges will be required to verify customer identities through mobile phone identification methods
- Banks that do business with these exchanges must monitor their compliance with the guidelines
Current Regulations and Compliance
While the proposed amendment is still pending in the National Assembly of Korea, authorities have already taken steps to regulate cryptocurrency exchanges through a self-imposed guideline. The Korea Financial Intelligence Unit (FIU) has established an anti-money laundering guideline relating to cryptocurrencies, which defines virtual currencies as “tokens or information stored on said token perceived as a means of exchange or storage of value by a contracting party.”
Key Requirements
- Major cryptocurrency exchanges such as Bithumb, Upbit, Korbit, and Coinone are required to conduct AML/KYC procedures
- Banks that do business with these exchanges must monitor their compliance with the guideline
As lawmakers continue to push for stricter regulations on cryptocurrency exchanges, it is clear that these entities will need to adapt quickly to avoid falling foul of AML/KYC rules. With the proposed amendment to Ruftia still pending, one thing is certain: cryptocurrency exchanges in South Korea will soon face a more intense regulatory landscape.
Conclusion
The proposed amendment to Ruftia aims to bring cryptocurrency exchanges under the purview of AML/KYC regulations, preventing them from being used for illicit activities. With the current self-imposed guideline already in place, it’s clear that these entities will need to adapt quickly to avoid falling foul of these rules.