South Korea is not slowing down its crackdown on illegal cryptocurrency-related businesses. The country’s financial regulators are going to inspect three major domestic banks over their compliance with the new cryptocurrency exchanges anti-laundering law (AML).
With the boom in public awareness of cryptocurrency currently, numerous exchanges are capitalizing on this trend to offer fraudulent ICOs to investors. The three banks Nonghyup, Kookmin and Hana bank will be inspected from April 19th to April 25th.
In a by South Korean Financial Service Commission (FSC), it reported that it will conduct an on-site inspection of the three banks mentioned above to examine if they are observing the new AML and Know-Your-Customer (KYC) rule. The South Korean Financial Intelligence Unit (FIU) authorized to checkmate money laundering and other financial crimes will also be working closely with the FSC.
An excerpt from the press release says that the purpose of the inspection is to “Check whether the target financial institution is providing bank account, check services bottlenecks, handling businesses trading volume (number of reserve accounts, deposit size), etc.”
South Korea’s Know-Your-Customers Law
Two of South Korea’s largest exchange Coinone and Bithumb are clients of NongHyup Bank which has been providing the real-name verification services. The new legislature mandates that Koreans using exchanges to trade may only hold one account, the identity details of which must match their bank account.
Previously, South Korean regulators moved to ban trading on cryptocurrency through anonymous virtual bank accounts in domestic banks according to the new KTC-law.
Today’s announcement from the South Korean government further hints at a policy that is unlikely to include that sweeping ban, which will now only extend to non-Korean nationals and anonymous trading.
internationally recognized firms like Upbit and Binance have taken measures to stamp out fraudulent practices while Bithumb commented that “We will make efforts to build a more transparent and healthy transaction system with the real-name trading platform.”
The South Korean Financial Intelligence Unit urges banks whose names were not included in the list to conduct their own investigations to ensure they comply with the new directives.