S Korean Banks to Probe Exchanges’ Privacy Coin Policies in Risk Checks

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Source: Adobe / Swapan

South Korean banks will take into account the privacy policies of the crypto exchanges, the nationality of their customers and the criminal record of the employees and will class them as “high priority” items when conducting risk assessment reviews to partner with trading platforms.

As previously reported, crypto exchanges have until September 24 to partner with a domestic commercial bank that can offer real name authenticated, social security number verified fiat on / off services or close their doors.

But the government has told banks that they have to assume 100% of the risk of partnering with an exchange – that is, if money laundering occurs on a trading platform, their partner bank should be to blame.

After financial regulators essentially told the banking sector to stop the moaning and accept their fate this week, banks responded by improving the criteria they will use to assess partnership requests for crypto exchanges.

Per Yonhap and Biz Watch, a South Korean banking association, presented a risk scale for banks that want to calculate the exact extent of the risk associated with a potential partner exchange.

The scale includes the following elements:

  • Data security certification
  • How effectively deposits, tokens and transaction details are managed for each customer
  • Whether privacy-promoting tokens are listed or not
  • History of embezzlement and / or fraud by managers and employees
  • History of hacking
  • profitability
  • Nationality of the users
  • credit rating
  • Number of tokens listed
  • Number of “high-risk” customers

Banks have also been directed to review how exchanges have managed, on an internal basis, anti-money laundering (AML) risk, internal audit policies, customer verification measures, and ID verification logs.

Banks have stated that unless the government eases its stance on crypto regulation, only the four exchanges with “real” banking partners will likely make it through September 24th.

Meanwhile, the operators of V Global, a domestic crypto exchange that police suspect is a front for a roughly UD 1.75 billion crypto Ponzi scheme, have taken another blow. The police, who arrested four employees, including the company’s 31-year-old CEO and at least two other executives, referred all four cases to prosecutors.

Yonhap reported that prosecutors are likely to announce later this month whether they will charge the group with fraud charges – after clients complained that they were promised exceptional returns on their operations.

Police said the CEO enjoyed an “lavish lifestyle” prior to arrest.
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