South Korea’s legal framework regarding digital currencies has undergone numerous changes over the past couple of months. Reports now indicate that the country’s government has modified its anti-money laundering policies, effectively requiring local banks to introduce stricter supervision towards all crypto-related bank accounts.
Supervision for Digital Currency Exchange Bank Accounts
The Financial Services Commission (FSC) along with the Financial Supervisory Service (FSS) have announced the change following a series of inspections carried out at several local banks, including the KB Kookmin Bank, KEB Hana Bank, and the Nonghyup Bank.
After concluding their inspections, the aforementioned regulatory agencies found that several crypto-exchanges transferred funds from investor deposit accounts to their own operational accounts, thereby failing to keep investor money separate from their personal assets.
As a result of this, South Korean authorities now plan on strengthening their supervision towards exchange-owned bank accounts. Banks will now be required to closely keep watch on how exchanges transfer funds and report any suspicious transactions. Additionally, financial firms will be required to share data on the foreign currency exchanges they work with– thereby preventing tax evasion and money laundering.
Starting from the 10th of July, South Korean financial firms will be required to refuse transactions from crypto exchanges if inspections cannot be carried out.
Following the announcement, most local cryptocurrency exchanges have responded positively saying that they are willing to cooperate.