The price gap between South Korean cryptocurrency exchanges and the famous cryptocurrency overseas known as “Kimchi Premium” has caused some concerns for the South Korean government. The latest report indicates that the country is planning to regulate international remittances related to kimchi premium-driven transactions.
Remittances using kimchi premium may be marked as money laundering
According to Maeil Kyungjae, the South Korean government has discovered that some domestic investors are actively sending statutes abroad in order to purchase cryptocurrencies from Chinese sellers.
This strategy allows these cryptocurrency traders to sell digital assets purchased from over-the-counter Chinese sellers and other locations on South Korean exchanges to take advantage of the premium price of kimchi.
In addition, South Korean authorities suspect that the decree dealing with Chinese sellers may be prosecuted because domestic merchants may be laundering money.
In other words, the Financial Supervisory Service (FSS) is evaluating this issue and hopes to develop guidelines for this type of remittance. Local media reported that it will involve consultations with the Ministry of Strategy and Finance and other departments.
In addition, FSS held meetings with heads of foreign exchange departments at undisclosed commercial banks in South Korea. The purpose of the briefing is to strengthen anti-money laundering (AML) measures by flagging suspicious transactions (such as higher amounts).
A bank has taken the first step to implement the limit
For example, South Korea’s annual overseas remittance limit is US$50,000. If someone sends so much money in a transaction, the bank will be required to mark it as suspicious and then report it to the authorities.
A major bank, Woori, has taken measures to limit the amount of remittances and set the amount of remittances to US$10,000 per month. In addition, if the customer wishes to send the legal draft to China, he should go to the branch to prove the motive for the transfer to the bank.
However, the banking industry is skeptical about the possibility of strengthening measures to handle such transactions. An official of South Korea’s “major commercial bank”, who asked not to be named, said:
The Ministry of Finance, the Financial Services Commission and the Financial Supervisory Authority have shown ambiguous attitudes towards the cryptocurrency field.
Kimchi reopens at a premium
As reported by Bitcoin.com news earlier this month, Bitcoin (BTC) and Ethereum (ETH) were up 18% from the global average at the beginning of this month.
At the time of publication (April 6), the BTC price on Bithumb was 77,804,000 won or 69,423 US dollars per unit. However, in most global cryptocurrency exchanges, the price per bitcoin hovers around $58,500.
What do you think of the Korean government’s plan? Let us know in the comments section below.
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