South Korean Banks Face Scrutiny Over Crypto Exchange Ties

South Korea's financial regulators began inspecting commercial banks to monitor their compliance with new cryptocurrency exchange rules.

Jan 8, 2018 at 10:45 p.m. UTC
Updated Sep 13, 2021 at 7:21 a.m. UTC

Six unnamed commercial banks in South Korea are being scrutinized by regulators for their relationship with the country's bitcoin exchange ecosystem.

According to a Jan. 8 statement, the Korea Financial Intelligence Unit and the Financial Supervisory Service want to know whether the banks – which offer accounts for cryptocurrency trading – are properly complying with anti-money laundering and customer identification rules.

"The inspectors will look into whether the banks comply with their anti-money laundering (AML) obligations in their transaction with cryptocurrency exchanges; and whether they have in place appropriate measures to verify their customers' identification in regard with cryptocurrency trading," the agencies remarked.

The release went on to note that officials will also investigate whether the banks have electronic systems to match deposit holders' names with virtual account holders and if the banks can halt transactions with exchanges which refuse to provide customer information, among other areas.

The release noted that the South Korean government is monitoring cryptocurrency trading, concluding:

"The government continues to review all possible options including shutdown of cryptocurrency exchanges in order to maximize side effects of cryptocurrency trading - fraud using cryptocurrencies, cyber hacks on cryptocurrency exchanges, and irrationally overheated speculation."

Less than a week ago, South Korean news organization Yonhap News announced that the country would begin implementing its new cryptocurrency exchange regulations later this month. Officials first revealed plans to more closely police Korea's exchange ecosystem in December.

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