International cryptocurrency exchanges that operate in the Korean won must conform with the nation’s Anti-Money Laundering (AML) regulations, according to Eun Sung-soo, head of South Korea’s Financial Services Commission (FSC).
As per The Korea Herald, Eun made these remarks while answering legislators’ concerns regarding the FSC’s intentions to oversee the digital currency exchange Binance.
Eun emphasized the importance of offshore platforms providing won-denominated crypto trading pairs adhering to the same anti-money laundering requirements as domestic platforms.
These international companies will need to report to the Korea Financial Intelligence Unit, the FSC’s anti-money laundering authority.
South Korea’s attempts to retain rigorous control on its domestic cryptocurrency sector are further evidenced by the FSC chairman’s statements. The government initiated an interagency effort in April to fight illicit digital currency transactions such as money laundering and tax evasion.
A new investigation found $1.48 billion in illicit foreign digital currency transactions, according to Cointelegraph, with over 30 people involved in the matter.
Eun’s demand to license exchanges is part of a new regulation that was published in March but is not poised to take place until September.
Platforms must use real-name account trading in addition to AML compliance. As a result, companies must establish banking connections with local financial institutions.
At present, only Korbit, Bithumb, Coinone, and Upbit — are now in conformity with the real-name trading requirement. Smaller digital currency exchanges are allegedly having trouble securing banking partnerships, and they fear being shut down after the six-month grace period expires in late September.
In the meantime, big South Korean banks are getting into the cryptocurrency custody market, with Woori being the newest to launch a digital currency custodial service.