Many countries are proposing more stringent regulations to ensure that crypto-related businesses have anti-money laundering measures in place. Numerous governments believe that cryptocurrencies might be aiding terrorism financing and money laundering, and they have planned to ensure zero tolerance for these vices. South Korea’s proposed regulation would focus mainly on crypto exchanges that are not doing enough to implement anti-money laundering laws.
As cryptos continue to gain mainstream media’s attention, it raises concerns for authorities as many cybercriminals use decentralized currencies to move money across borders. Most South Korean exchanges have know-your-customer requirements customers have to meet before they can buy or sell cryptocurrencies. Asides from KYC measures, some limit the number of cryptos that can be sent daily to prevent the possibility of criminal funding activities.
South Korea to penalize businesses without AML measures
Exchanges that do not follow strict AML laws might face the wrath of the law as the country’s top regulator plans to propose stricter penalties. The regulation called the Financial Service Commission (FSC) said that by April that crypto exchanges and other businesses that facilitate crypto-related transactions could face a possibility of getting fined.
The fines are as large as $26,000 to $52,000, or even 30% and above for maximum penalties. Companies that aren’t reporting strange transactions keeping data on those kinds of suspicious happening, or even keeping logs of transactions would likely pay heavy fines. On the other hand, smaller businesses will pay a smaller portion of the fine.
Even though the country is yet to implement the law, exchanges are already reacting and following the new regulation accordingly. One of the country’s biggest crypto exchanges, Bithumb, started limiting accounts from nations that don’t have AML measures from doing various transactions.
The government’s task force known as Financial Action Task Force (FATF) has gotten over 20 regions that have refused to implement AML measures. Interestingly, North Korea is one of the listed counties yet to have strict money laundering laws.
Companies to follow country’s Travel Rule
Concerning Bithumb’s latest move to restrict some accounts, a Bithumb official explained that the business would continue improving its system to protect investors by improving transparency within the space. According to reports, the nation is not the first to implement AML measures but has been one of the most outspoken about the measures.
South Korean authorities have advised some other countries to have those measures in place and blacklisted some nations that ignored the recommendations of the Asian country. One of the regulations that crypto exchanges are working on before the regulation’s official implementation is the Travel Rule.
The Travel Rule is a situation whereby crypto exchanges are expected to share some sensitive information to other exchanges when individual plans to send above $3,000. Due to this new rule, companies have to figure how to put this in place before the regulator starts penalizing defaulters. The country’s regulator, FATF, understands that South Korea has put in place necessary AML measures. Still, it believes more things must be done to prevent politicians from laundering money stolen from the public.
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