Korean Watchdog Tightens Rules On Crypto Exchange Bank Accounts For Money Laundering

June 27, 2018 3:48 pm Published by

South Korean banks will be required to tighten up monitoring of bank accounts after financial regulators amended the anti-money laundering rules applying to cryptocurrency exchanges in the country, CoinDesk reported Wednesday.

For one year, banks who provide services to crypto exchanges must now monitor all the accounts held by an exchange, an announcement by the Financial Services Commission (FSC) said Wednesday.

Exchanges, the report said, generally have several accounts with a bank – including a depositing account holding traders’ funds on the platform, as well as an operating account storing the exchange’s own assets.

However, the FSC explained its recent inspections at three institutions – Nonghyup Bank, KB Kookmin Bank and KEB Hana Bank – found some exchanges had moved assets from investors’ depositing account to their own operating accounts, CoinDesk reported.

By doing this, the exchanges, according to a report from CoinDesk Korea, had directly violated guidelines requiring exchanges to keep investors’ assets separate from their own.

The FSC, the report said, fears since banks currently only monitor investors’ depositing accounts at crypto exchanges, any absence of wider account scrutiny may increase the possibility of exchanges laundering money or evading taxes by using their operating accounts to buy cryptocurrencies from foreign exchanges.

As a result, the amendment will require banks to monitor transactions in which exchanges move assets to or from foreign exchanges, CoinDesk reported. In cases where suspicious transactions appear, the information must be shared with the FSC.

The new rules marks the FSC’s latest tightening of anti-money laundering controls at crypto exchanges, the report said. In January, the watchdog issued an order all trading platforms must implement real-name verification, outlawing anonymous trading in the country.

WN.com, Jack Durschlag

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