AML compliance mandatory for foreign crypto exchanges, says Korean regulator

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Eun Sung-soo, chairman of the South Korean Financial Services Commission (FSC), said foreign crypto exchanges trading in Korean won must adhere to the country’s anti-money laundering (AML) standards.

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

Eun reiterated the need for overseas exchanges offering won-denominated crypto trading pairs to meet the same anti-money laundering standards as in-country platforms.

As part of this compliance, these overseas exchanges must register with the Korea Financial Intelligence Unit – the FSC’s AML watchdog.

The FSC chairman’s remarks are also another indication of South Korea’s efforts to closely monitor its local crypto market. Back in April, the government announced an inter-agency operation to combat illegal cryptocurrency transactions, including money laundering and tax evasion.

As Cointelegraph previously reported, a recent investigation uncovered illegal crypto transactions abroad valued at $ 1.48 billion involving over 30 people.

The Eun’s guideline on the registration of exchanges is part of the revised law announced in March, but which is due to come into force in September.

Connected: South Korea’s small crypto exchanges are facing increasing regulatory heat

Aside from AML compliance, exchanges must also use real name accounts trading. Therefore, platforms need to establish banking relationships with financial institutions in the country.

Currently only the “Big Four” – Korbit, Bithumb, Coinone and Upbit – meet the requirements for trading with real names. According to reports, smaller crypto exchanges are finding it difficult to secure banking partnerships and risk being locked out of operations after the six-month grace period expires in late September.

Meanwhile, major South Korean banks are getting into the crypto custody business, with Woori being the latest financial institution to announce a cryptocurrency custody product.