South Korea’s financial regulator to inspect 3 Banks over Crypto exchange connections


South Korea, through its financial regulator has confirmed that it will be inspecting three major domestic banks over there compliance with the new anti-money laundering accounts in a bid to make cryptocurrencies legal and safe.

In a statement that was released to the press on Monday, the Financial Services Commission (FSC) and the Financial Intelligence Unit (FIU) will be conducting inspection to KB Kookmin, KEB Hana and NongHyup banks from April 19 to 25.

Banks in South Korea were this year prohibited from offering unknown accounts to cryptocurrency exchange customers from February in a move to prevent any form of money laundering and illicit capital outflow through cryptocurrencies.

Since that time that the ban was issued, at least six banks KookMin, KEB Hana, NongHyup, Shinhan, IBK and JB have been deeply involved in the implementation process of new procedures. It is due to this that three out of the six banks will be inspected this month. NongHyup has been providing fast verification processes for two major cryptocurrency exchanges in South Korea.

The focus of the Inspection

The main focus of the inspection is to ascertain whether the banks have been able to compile to the new regulations and have provided real-name verification rules for cryptocurrency exchanges in South Korea.

With this kind of inspection, the FSC and the FIU said that they would be focusing on a number of details which include checking trading accounts and their respective deposits, trading volume and also checking if they have adhered to the anti-money laundering rules. The Financial Intelligence Unit also advised the banks to conduct their own inspections to ensure that they have complied with the new rules that have been set forth.

Korean’s will be allowed to hold one account to trade

As part of legislation that is currently going on, Koreans will be allowed to hold only one account which must match their bank account. The new requirements have put pressure on banks and exchanges to ensure that trading remains legal in South Korea. This has made the small institutions to struggle to get grips with the Financial Services Commission’s demand.

This rule is going to make KookMin Bank, NongHyup Bank and Hana Bank to individually face scrutiny. NongHyup is the service partner of Coinone and Bithumb which are two of Korea’s biggest exchange.

The financial watchdog had previously conducted an on-site inspection in the month of January and another one on March 22.

Preparations continue filling in the remaining legal gaps in the cryptocurrency economy, with legislation due in the month of June. The Financial Intelligence Unit also urged other financial institutions that were not included in the inspection to conduct their own inspections and checks in an effort to comply to new rules that have been set up. The new rules include anti-money laundering laws and real-name verification guidelines. The Korean government is said to be drawing up a cryptocurrency taxation framework that is expected to be made public in June this year as mentioned earlier. South Korean government might begin taxation in 2019 and this a step forward towards legitimising cryptocurrency.



Leave a Reply