South Korea will prohibit cryptocurrency exchanges from processing digital assets that it considers “dark money”. The regulator Financial Services Commission (FSC) specifically targets privacy coins such as dash, monero and zcash.
●The ban will take effect from March 2021. In an update to the encryption regulations under the Special Payments Act, the FSC alleged that privacy coins are beneficial to money laundering activities.
●It said that transactions involving privacy coins such as monero (XMR) or zcash (ZEC) are difficult to track by law enforcement agencies (including the commission itself).
●This is because this virtual currency uses sophisticated technology to cover up its transaction records, mainly to protect them from unnecessary attention, such as the attention of law enforcement officials.
● FSC also instructs cryptocurrency exchanges to implement strict “Know Your Customer (KYC)” and “Anti-Money Laundering (AML)” strategies. It requires the platform to check these details against government-issued documents (such as ID cards or passports).
●The exchange must report its operations to the competent authority within six months of implementing the guidelines.
● Since then, South Korean platforms such as Okex have been forced to remove multiple privacy coins to align with the Financial Action Task Force (FATF) rules on money laundering.
●In the United States, the Internal Revenue Service (IRS) recently signed a $1.25 million contract with Chainalysis and data forensics company Integra Fec to provide it with tools that can destroy the privacy-centric coin monero.
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