South Korea’s top financial regulator on Tuesday outlined a new set of measures that intend to curb speculation and remove the anonymity in the country’s cryptocurrency market.
This document details the government’s “special measures” for the Elimination of Virtual Currency Speculation which was first announced on December 28. The government also announced on Tuesday its anti-money laundering guidelines, prepared by the Korean Financial Intelligence Unit, for all banks dealing with cryptocurrency accounts.
Switching to a Real-Name System
Much of the regulations are about the government-mandated real name system. This will replace the current banking practices of virtual account issuance. Virtual accounts have been used to issue accounts to the customers of cryptocurrency exchanges to deposit and withdraw money from.
This system will be live on January 30th, and existing virtual accounts will be converted into real-name accounts. Six major banks will implement the system.
Customers will now need to open an account at the bank providing virtual account services to the exchange that they use.
Earlier in January the FIU and the FSS conducted on-site inspections of the 6 major banks of South Korea to ensure that they have met their anti-money laundering obligations. The FIU subsequently released guidelines on Tuesday for banks.
Exchanges normally separate their funds from users’ funds, however, the inspections revealed that some exchanges used general corporate accounts to collect money from users. One exchange collected funds from users through four bank accounts belonging to the exchanges’ representatives, then moved it to the company and then spent 58 Billion won from that account.
The banks are now also asked to monitor the exchanges’ accounts to prevent money laundering:
“If the transaction amount is more than KRW 10 million per day, more than KRW 20 million for 7 days, or frequent transactions occur in a short time, it should be reported to the FIU, the money laundering monitoring authority. If the exchange has a high risk of money laundering or requires information, the bank may terminate the transaction.”
Tiaan Wolmarans is a cryptocurrency investor and trader, airplane pilot, musician, and writer.
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