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South Korea’s AML Legislation to Cover Overseas Crypto Exchanges

South Korea’s Financial Services Commission (FSC) is expanding the boundaries of its anti-money laundering (AML) guidelines to cover overseas crypto exchanges. According to the FSC, crypto exchanges outside South Korea will be obliged to comply with existing guidelines as long as they provide trading offerings in the country’s official currency, Won. This is one of the many directives the regulatory body has issued to crypto exchanges since the past few weeks.

The latest directive is credited to the FSC’s Chairman, Eun Sung-soo, per the comments made during a meeting with the South Korean parliament, which was interested in knowing the plans of the commission to regulate leading cryptocurrency platform, Binance. Binance is a Cayman Islands-based exchange, but provides its offerings to most countries around the globe. Binance is the largest cryptocurrency exchange by daily trading volume.

Overseas Crypto Platforms to Register with the Intelligence Unit

Lately, the FSC has been active in the cryptocurrency sector. Chairman Eun further said any crypto exchange outside South Korea that provides trading pairs in Won is covered by the AML guidelines just as exchanges within the country are obliged to do. Also, the Chairman said that overseas exchanges would have to complete a registration process with an arm of the commission- the Financial Intelligence Unit (FIU).

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In view of this, the FSC reportedly arrested about 30 persons suspected of engaging in overseas crypto transactions. The FSC confiscated $1.48 billion as proceeds from the arrest. According to the regulatory body, the arrested parties allegedly committed money laundering and other criminal offences. As such, they will be fined and prosecuted, FSC revealed. 

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FSC Directs Exchanges to Issue Real-name Accounts

In recent times, the FSC has been mounting pressure on crypto exchanges operating within South Korea to liaise with banking institutions on its directive. The body said this was necessary in light of its directive in 2018 compelling all crypto exchanges to begin issuing real-name accounts to their users. 

While compliance has been low among crypto platforms, the FSC gave a deadline of September. So all exchanges must partner with banks before the deadline and carry out the directive. It has been relatively easy for major exchanges to find banking partners even with the apprehension surrounding the collaboration. 

South Korean banks expressed concerns about being held liable for fraudulent crypto transactions. However, the FSC added a clause to existing regulations allowing government officials to exempt banks from any sort of liability. Smaller exchanges are still struggling to find banking partners as the deadline draws near.

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Meanwhile, the Bank of Korea is making plans to run a CBDC pilot program to enable it assess the pros and cons of a digital version of the Won in the country. Preliminary results of tech firms which applied to partner with the BoK were announced yesterday. The BoK said the program will begin by August and run its course until September.


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Shelly Melancon (Switzerland)

Shelly is a cryptocurrency enthusiast from Switzerland, she bought her first crypto in 2015 when it was way less popular then it is today and since 2017 she has been writing about cryptocurrency for online news portals. Shelly is the newest addition to the Tokenhell team, she writes mostly news and reviews related articles , stay tuned to her posts to stay up to date with the crypto world.

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