If they do not abide by South Korea’s new regulations, overseas cryptocurrency exchanges selling to South Koreans will be blocked. The country’s anti-money laundering agency has issued notices to several foreign trade platforms, warning them that they must register to provide services to South Korean residents.
South Korean financial intelligence agency notifies foreign cryptocurrency exchanges of registration obligations
If these platforms do not comply with the country’s new regulations on the industry, they may be denied access to foreign cryptocurrency exchanges, and these platforms may face criminal investigations in South Korea. One of the key requirements is to register with the Financial Intelligence Unit (FIU) of South Korea’s anti-money laundering agency before September 24.
The Korea Herald quoted the Financial Services Commission (FSC) on Thursday to announce that in order to remind them to fulfill their obligations, FIU has issued notices to 27 entities that conduct crypto transactions against South Korean nationals. Officials said that the regulations passed earlier this year also require exchanges to have information security certificates, but no exchange has yet to obtain them.
The committee emphasized that unless registered with FIU, foreign exchange exchanges will cease business operations in South Korea from September 25. Unregistered activities will result in penalties, including imprisonment of up to five years and fines of up to 50 million won (more than 43,000 U.S. dollars). In a statement sent to the National Policy Committee of Parliament, the FSC stated:
According to the revised “Specific Financial Transaction Information Reporting and Use Law”, business activities carried out by overseas cryptocurrency exchanges against local customers are illegal without reporting to the financial intelligence department (an anti-money laundering department under the Financial Services Commission) of.
The compliance deadline is approaching, and few exchanges meet the new requirements
South Korea’s revised “Special Fund Law” came into effect on March 25, but will be implemented in September after a six-month grace period. Another of its updated regulations requires cryptocurrency exchanges to cooperate with domestic banks to issue real-name accounts for their users. Although the country’s four major token trading platforms-Bithumb, Upbit, Coinone and Korbit-have established partnerships with commercial banks, hundreds of small exchanges are facing closure.
Bank of Korea is worried about facing money laundering, hacking, fraud and other risks related to encryption. According to the new rules, they will be responsible for evaluating the transparency of encryption platforms and the possibility of criminal activities. According to reports, earlier this month, South Korean regulators rejected requests for exemptions from crimes committed by cryptocurrency exchanges that they cooperated with.
According to the Korea Herald, FSC is planning to send guidance on the new regulations to foreign cryptocurrency operators that provide services in the country. FSC Chairman Eun Sung-soo told lawmakers last week: “If overseas cryptocurrency exchanges provide local customers with Korean won currency settlement services, they must register with FIU and follow the government’s guidelines for preventing money laundering.”
After authorities in other jurisdictions such as Italy, Lithuania, the United Kingdom, Japan, Germany, and Poland issued warnings to Binance, the world’s leading digital asset trading platform, South Korean financial regulators are strengthening their stance on foreign crypto service providers. The Korea Daily pointed out that the new regulatory measures on the exchange include a temporary suspension of operations and stricter reporting requirements, which shows that the global market is increasingly cracking down on the market.
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