The South Korean Government released an order, announcing that if any of the foreign crypto exchanges in the country fails to comply with new rules, then they would have to face some punishments.
As per the notification, the overseas crypto exchanges could offer their services to Korean residents, only if, the trading platforms register themselves with the Korean anti-money laundering body, the Financial Intelligence Unit (FIU) by September 24.
The Financial Services Commission (FSC) has mentioned that all the crypto trading platforms in South Korea have received a notice to 27 entities, so that, they do not forget their obligations. However, it is to be noted that a few new regulations imposed by the Korean Government, earlier this year, have not yet been obtained by any of the crypto exchanges.
The commission, in its announcement, has made very clear that if the foreign exchanges failed to register them with the FIU by September 24, then from the very next day, their operations would be ceased in the country.
The unregistered crypto exchanges would have to face punishment like five years of imprisonment and a fine that could reach 50 million won (over $43,000).
While elaborating the new regulation to the parliamentary National Policy Committee, the FSC stated, “Business activities carried out by overseas cryptocurrency exchanges targeting local customers without reporting to the Financial Intelligence Unit — an anti-money laundering unit under the Financial Services Commission — are illegal under the revised Act on Reporting and Using Specified Financial Transaction Information.”
On March 25, the revised Special Funds Act came into effect in South Korea, but the government also decided to enforce it in September, offering a six-month grace period to the crypto exchanges.
The updated act further asked the crypto exchanges to cooperate with domestic banks on the issuance of real-name accounts for their users.
On one hand, the top four crypto trading platforms in the country, including Bithumb, Upbit, Coinone and Korbit, have collaborated with the commercial banks, while on the other hand, the smaller exchanges are terminating.
Several banks in Korea dealing with crypto-related activities have been prone to many illegal activities like money laundering, fraud and other risks related to digital currencies. However, with the introduction of new rules, they would be able to evaluate a crypto platform’s transparency and the possibility of criminal activity.
The FSC would soon be sending the guidelines related to new crypto regulations, to the foreign exchanges in the country.
A week ago, the FSC Chairman Eun Sung-soo told the lawmakers, “If overseas cryptocurrency exchanges serve local customers with the won-currency settlement, they must register with the FIU and comply with the government’s guidelines to prevent money laundering.”