Mandatory AML Compliance for Foreign Crypto Exchanges, According to Korean Regulator

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Eun Sung-soo, chairman of South Korea’s Financial Services Commission (FSC), said foreign crypto exchanges that deal in Korean won must comply with the country’s anti-money laundering standards.

According to The Korea Herald on Tuesday, Eun made the comments while answering questions from lawmakers about FSC’s plans to regulate crypto exchange giant Binance.

Eun reiterated the need for foreign exchanges that offer won-denominated crypto trading pairs to adhere to the same anti-money laundering standards as platforms based in the country.

As part of this compliance, these foreign exchanges will have to register with the Korea Financial Intelligence Unit, the AML supervisory body of the FSC.

The FSC chairman’s remarks also offer another indication of South Korea’s efforts to maintain strict oversight of its local crypto market. In April, the government announced an interagency operation to tackle illegal cryptocurrency transactions, including money laundering and tax evasion.

As previously reported by Cointelegraph, a recent investigation revealed $ 1.48 billion in illegal crypto transactions overseas with more than 30 people involved in the case.

The Euns directive for registered exchanges is part of the revised law announced in March but is expected to come into force in September.

Related: South Korea’s Small Crypto Exchanges Face Rising Regulatory Heat

Besides AML compliance, exchanges must also use real name account trading. As such, the platforms must forge banking relationships with the country’s financial institutions.

At present, only the big four Korbit, Bithumb, Coinone and Upbit comply with the real name trading provision. Smaller crypto exchanges would struggle to secure banking partnerships and risk being banned from operating after the six-month grace period expires at the end of September.

Meanwhile, major South Korean banks are entering the cryptocurrency custody business, with Woori becoming the latest financial institution to announce a cryptocurrency custody product.

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