South Korea’s Regulatory Watchdog Hints Towards Positive Cryptocurrency Guidelines
South Korea’s topmost regulatory financial agency - Financial Services Commission (FSC) - has recently unveiled its new regulatory guidelines and framework in regards to know-your-customer (KYC) and anti-money laundering (AML) requirements for the digital currency exchanges.
The new guidelines also hint towards some positive changes taking place in the South Korean cryptocurrency space. However, the FSC has strengthen the regulations on crypto transactions and user monitoring in its revised money-laundering prevention guideline that is targeted at cryptocurrency exchanges. Moreover, another financial watchdog, the Korean Financial Intelligence Unit (KFIU) has been tasked to oversee all the transactions and user activity.
Additionally, as a broader part of the investigation, the FSC has also asked authorities to monitor the operations of three major banks - Nonghyup, Hana Bank, and Kookmin who are having major ties with the digital currency exchanges and are providing banking services.
As a part of the revised guidelines, going forward, cryptocurrency exchanges will be required to perform Customer Due Diligence (CDD) and Enhanced (EDD) and also sufficient background checks. This is to monitor specific activities like criminals are not using individual and personal accounts to launder money. Similarly, foreigners shall not be allowed to use local accounts to trade digital currencies. This will help in preventing suspicious transactions along with payment processing.
Another policy that has been imposed by the regulatory body is to monitor and spot the suspicious fund movements taking place between the bank and cryptocurrencies and also the individual accounts. The is done specifically to prevent the re-emergence of the “Kimchi Premium”. If the banking institutions have a suspicion on huge sums of money being transferred, the can leverage the “Kimchi Premium” wherein authorities can investigate into the user or an organization.
These new policies introduced by the government are aimed at bringing the transparency in the local cryptocurrency exchange and has been acknowledged by the public towards a better intent of legitimizing the cryptocurrency market.
The government of South Korea has enhanced its efforts towards regulating the crypto market specifically after a series of attacks on crypto exchanges recently taking place in the country. The South Korean government sees a pressing need in order to bring the market in order by introducing customer-friendly regulatory framework and policies.