South Korea to Impose Hefty Fines on Crypto Exchanges for Failing to Comply with AML Rules

South Korea’s financial regulator, the Financial Services Commission (FSC), has announced new possible penalties for cryptocurrency exchanges based or operating in the country if they fail to comply with existing anti-money laundering (AML) rules.

New Penalties for Crypto Exchanges in South Korea

According to the FSC’s statement from earlier today, the newly-announced initiative will affect all virtual asset service providers (VASPs), including digital asset exchanges.

The revision proposal for the supervisory regulation is scheduled to become effective on March 25th, 2021, and it will introduce new penalty standards on such businesses. Per the statement, the revision “simplifies and integrates existing penalty rules and improves rules on penalty abatement to provide relief for small-scale financial enterprises.”

Every virtual asset service provider could become subject to the fines if it violates one of the following three procedures. Namely, those are – failure to report suspicious transaction activities (known as internal control duties), failure to keep relevant data on such transactions (data maintenance duties), and failure to keep separate management of customers’ transaction records.

“The revised regulation also introduces a new penalty abatement of fifty percent. For small-scale entities, penalty abatement can be granted in excess of the fifty percent limit.” – explains the statement.

In another cryptocurrency-related issue that has been ongoing for a few years, South Korea’s congress decided to delay the digital asset income tax last year. The new deadline is set for January 2022.

Bithumb Ahead of the Curve?

Just a few days before the FSC declared its intentions, the country’s largest cryptocurrency exchange, Bithumb, banned users accessing its website from countries with no anti-money laundering rules.

The press report noted that there’re 21 such nations currently “on the watchlist for failing to implement anti-money laundering measures issued by the Financial Action Task Force.” The FATF is an intergovernmental body that sets international standards to prevent global money laundering initiatives and the financing of terrorism.

Iran and North Korea were the first two blacklisted countries, while Syria, Pakistan, Yemen, and Botswana were still in the gray area.

“The company will continue improving its system to protect investors and enhancing transparency in the crypto market.” – commented an official from Bithumb.