Foreign crypto exchanges will face blocked access unless they register with South Korea’s anti-money laundering body as said by the nation’s top financial regulator.
All crypto exchanges using Korean currency must register with the Korea Financial Intelligence Unit (KFIU) by September 24th. Foreign exchanges are not the only ones under scrutiny as domestic cryptocurrency exchanges must also follow the new regulations.
Notice has been sent to 27 foreign crypto exchanges that have business operations targeting Korean people, Financial Services Commission said. The new policy also requires a certificate for cryptocurrency exchanges on information security from South Korea. Until now, there were no certificates for foreign exchanges, said by FSC officials.
Foreign exchanges must suspend business operations targeting Koreans starting September 25 unless they register with the KFIU, according to FSC. “They will face prison for 5 years or a fine of 50 million won (US$43,455) if not registered,” it stated.
Banks are required to create real-name accounts under stricter rules to stop money laundering under the new regulation. This came into effect in March with a six-month grace period. Banks will examine a cryptocurrency exchange’s transparency, commercial risks, and the possibility of criminal behaviour under the new rule.
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Minor cryptocurrency exchanges in South Korea, estimated to number over 100, have been tempting investors with opaque accounts. Cryptocurrency exchanges can use these accounts to manage their investors’ funds through their own bank accounts.
Maximum youths are investing in cryptocurrencies hoping for profit, stating that they cannot afford a property with their wage alone.
Against repeated warnings from authorities, Korean investors have been buying virtual currency in large quantities in the middle of the pandemic.
