Since the South Korean government has stepped up its anti-money laundering (AML) campaign, major crypto exchanges in the Asian country are voluntarily complying, but banks are reportedly failing to meet standards set for compliance. South Korea has also begun discussing methods to boost crypto-related AML measures with the United States.
The South Korean AML measures currently do not apply to crypto exchanges. The government made banks responsible for policing and reporting any possible crypto-related money laundering activities.
Many banks have started hiring compliance officers. This was an effort to comply with the AML directives.
One example is NH Nonghyup Bank, which the Korea Times reported had “recently created an independent unit exclusively to handle compliance-related issues.” However, the Joongang Daily said in its report on Sunday that:
“Despite the effort, Korea’s financial watchdog, the Financial Supervisory Service [FSS], warned that the bank has not sufficiently improved its internal control system.”
The South Korean Government has started collaborating with the US to help boost the AML measures relating to crypto. The Korea Times said:
“U.S. Treasury Secretary Sigal Mandelker has discussed with FSC Vice Chairman Kim Yong-Beom how to boost anti-money-laundering measures especially related to crypto-assets in addition to international cooperation measures.”
However, it seems the US has found that Korean Banks AML measures are inadequate. The Financial Services Agency (FSC), South Korea’s top financial regulatory body, said last Friday that the New York Department of Financial Services (NYDFS) notified them with plans to investigate Korean Banks that operate in New York suspected of failing to meet compliance guidelines. These banks are Nonghyup Bank, Woori Bank, KB Kookmin Bank, Shinhan Bank and two state-run banks – the Industrial Bank of Korea and the Korea Development Bank.
In the meantime, crypto exchanges in South Korea have stepped up their compliance. The largest exchanges voluntarily upgraded their AML and internal control systems. Bithumb blocked 11 countries from using their trading platform and lowered withdrawal limits for non-verified accounts. Upbit has adopted the use of Thomson Reuters’ World-Check for the same purposes. 23 other South Korea-based crypto exchanges also agreed to comply with the new self-regulation standards created by the Korean Blockchain Industry Association.