Korean Regulator To Tighten Rules On Crypto Exchange Bank Accounts


South Korea’s top financial regulator amended the country’s anti-money laundering applicable to cryptocurrency exchanges in the country. The changes now require domestic banks to begin tightening monitoring of cryptocurrency-related bank accounts.

An announcement from the Financial Services Commission (FSC) released Wednesday reveals that the amendment will initially be in effect for a year. The amendment means domestic banks that handle crypto exchange accounts must now check all accounts held by an exchange.

Usually, an exchange maintains several accounts with a bank. These accounts are for separate purposes, such as one for holding traders’ funds on the platform and another that functions as an operating account that stores the exchange’s own assets.

The FSC, however, says that its recent inspections done at three banks, namely Nonghyup Bank, KB Kookmin Bank and KEB Hana Bank found that some exchanges moved assets from their investors’ depositing account to their own operating accounts.

This action violated guidelines that require exchanges to keep their investor’s assets separate from their own.

Banks in South Korea currently only monitor investors’ deposit accounts at crypto exchanges, and the FSC thinks the absence of wider account scrutiny increases the risk of money laundering or tax evasion, with exchanges using their operating accounts to buy cryptocurrencies from foreign exchanges.

This amendment ensures that banks will keep an eye out for transactions that move assets to and from foreign exchanges. The FSC expects banks to share information about suspicious transactions with them.

The rule changes mark the FSC’s continued strengthening of anti-money laundering controls at cryptocurrency exchanges. Earlier this year, the FSC issued an order requiring all cryptocurrency exchanges to implement real-name verification. The FSC also banned anonymous trading in the country.

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