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South Korean crypto exchanges have been given a brief extension in their race to adopt anti-money laundering (AML) protocols – despite the country’s top regulator FSC has promised to put the industry under “close scrutiny” in the coming months.
Regulator extends adoption of AML protocols by Korean crypto exchanges for another 6 months
The first regulation of the country’s crypto-specific legislation mainly aimed at controlling exchanges – was enacted on March 25, and exchanges have announced the time until the beginning of the month. 7 to ensure their AML protocols are in place and ready to be audited by partner banks and financial regulators.
The trading platforms have also been given a 6-month grace period to achieve information security management system (ISMS) certification, demonstrating management structure with the regulatory Financial Services Commission (FSC). ) and obtain a real-name banking partner from a domestic commercial bank.
So far, only 4 exchanges have bank transactions that last 6 months, although all of these will expire before the grace period ends. Last week, 20 exchanges obtained ISMS certification, with another 10 expected to follow suit ahead of time.
But so far none of the exchanges have done banking transactions after September, and a few have acquired financial sector-level AML capabilities. In addition to meeting regulators on their AML compliance, they will also need to pass risk assessment checks from banks, who will ultimately be empowered to decide the fate of the sector. Korea’s exchange sector. More and more banks are excluding the possibility of cooperating with exchanges, causing exchanges to fear for their future.
However, according to Yonhap and Seoul Shinmun, the FSC has now found it appropriate to extend the AML application deadline until the end of 2021.
The regulator claims that the move will allow it to “minimize the damage to customers that can occur when exchanges fail to report to the authorities by the end of September and then close.”
Even so, the FSC continues to talk tough – it claims to begin “in-depth” monitoring of exchanges by the end of September and that the probes, checks and document reviews are likely to follow. took three months to complete in each case.
South Korea May Close All Cryptocurrency Exchanges By Year’s End Without Licenses
South Korea’s anti-money laundering protections will take effect on Thursday after cabinet officials approved a series of amendments last week, according to the Financial Services Commission (FSC). Financial Services (FSC).
Registered Virtual Asset Service Providers (VASPs) must submit suspicious transaction reports to the FSC, conduct their own compliance audits, and verify the identities of their customers starting March 25.
Cryptocurrency companies engaged in crypto custody, trading, trading, exchange and wallet services have a 6-month grace period to register with the FSC before facing sanctions. potential non-compliance beginning in late September, the FSC said.
The FSC first called for crypto-focused updates to the country’s AML framework in November 2020 in an effort to stay on track with the Fiscal Action Task Force’s crypto oversight regime. main.
South Korea’s National Assembly voted in favor of the update on March 5. Cabinet officials gave the green light to the law on March 17.
FSC started accepting applications from March 25, but since then, no exchange has applied. In fact, exchanges have until September 24 for their registration to be approved by the FSC, and the FSC will only approve exchanges that can demonstrate and commit to complying with the AML system.
Therefore, it is likely that very few exchanges can survive the wave of “intensive surveillance” of the FSC.
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