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South Korea’s Financial Services Commission (FSC) administrative guidelines regarding the regulation of crypto exchanges have been extended until the end of the year.
The validity period of the FCS “Virtual Currency Money Laundering Prevention Guidelines” runs from July 9 to December 31. This directive requires banks and other financial companies to carefully monitor financial transactions on the virtual currency exchange.
This implies that financial firms classify cryptocurrency processing firms as having a high risk of money laundering. This then requires further strengthening of customer identification and monitoring of financial transactions.
CRF Requirements for Crypto Exchanges
According to the specific law on financial information, financial companies are required to report suspicious transactions to the Financial Intelligence Unit (FIU). If customers refuse to verify their identity, financial companies should reject these transactions.
An FIU official explained, “When a virtual asset (virtual currency exchange) operator completes a report, it is handled by the Financial Services Commission, but before that there may be areas where it is difficult to apply the revised special law, we must consult the guidelines.
Virtual money changers must submit a report to the FIU by September 24 demonstrating that they meet the requirements. These include real name verification for open accounts as well as information protection management system certification. After declaration, they are subject to supervision and inspection by the FIU. The FSC expects the virtual asset activity reporting process to be completed by the end of the year. This is because it takes about three months to review the report.
Real name verified accounts requirement
Many virtual currency exchanges are expected to close without meeting reporting requirements under special law. According to the FSC, as of May 20, there were around 60 virtual asset exchanges in operation. Of these, only four are currently operating with verified real-name accounts issued by banks. It is for this reason that the FIU held a meeting of inspection bodies on June 9. At that meeting, she declared her intention to strengthen the watchdog accounts of virtual asset operators who do not use real-name verified accounts.
A verified real name account is a service that allows deposits and withdrawals only between the bank account of a verified merchant and the same bank account on a virtual bureau de change, making it easier to identify the identity of the user and transaction details. According to the FSC, an account that is not a verified real-name account poses a greater risk of money laundering.
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