TL;DR Breakdown
- South Korean exchanges will be subjected to intensive AML measures from March 25.
- Violation of the new law attracts a fine of $44,000 and five years jail term.
The South Korean authorities are stepping up to enforce anti-money laundering AML measures on cryptocurrency exchanges amid the increasing level of security concerns in the space. Going forward, exchanges operating in the country will be required to register and adopt several anti-money laundering policies to regulate the industry against illegal transactions.
Upbit and some other South Korean exchanges previously hinted at this development on the 16th of February.
Exchanges to reinforce AML measures
Starting on the 25th of March, digital currencies in South Korea will be required to register with the country’s Financial Intelligence Unit, the anti-money laundering watchdog. This new regulation, approved by the Financial Services Commission, subjects these exchanges to stricter monitoring policies to ensure mitigation of illegal activities, including money laundering, with digital currencies. The Korean international broadcasting company, Arirang, reported the development on Tuesday.
Among other things, crypto exchanges will adopt know-your-customer (KYC) policies as part of the AML measures. Such customer-identifying protocols are important for monitoring and reporting suspicious crypto transactions made on the exchanges. According to the report, crypto businesses that violate or fail to observe the new regulation by registering with the AML body within the next six months will be sentenced to five years imprisonment.
They might also pay a fine of about 50 million won (about $44,000).
Korean exchanges record a spike in crypto trading
Interest in digital currencies has been extensively increasing in South Korea, probably due to the recent rallies in the market. Many exchanges in the country reported massive crypto trading volume over the last quarter of 2020. To some extent, some exchanges like Bithumb, Upbit, and Coinone, suffered server downtimes as a result of increasing user activities.
From Zero to Web3 Pro: Your 90-Day Career Launch Plan
