Thursday, January 25, 2018

Finally South Korea Government Released a Guidelines About Regulation for Cryptocurrency Exchange

Finally South Korea Government Released a Guidelines About Regulation for Cryptocurrency Exchange - The South Korean government has officially released two previously promised set of guidelines that define the cryptocurrency regulatory measures. In addition to the details of the new real-name system for the anonymous end of trading of cryptocurrencies, the government also publishes money laundering guidelines for banks that provide services for cryptocurrency exchange.

Implementation of crypto steps

On Tuesday, the South Korean government officially released the document containing guidelines for the previously promised cryptocurrency rule. The announcement was made by Vice Chairman of Financial Services Commission (DKP), Kim Yong-bum.

Finally South Korea Government Released a Guidelines About Regulation for Cryptocurrency Exchange
This document details the government's specific steps for the removal of Virtual currency speculation announced on 28 December. In addition, the government also announced on Tuesday the money laundering (AML) guidelines, prepared by the Korean Financial Intelligence Unit (FIU), an FSC division, for all banks dealing with cryptocurrency accounts to follow.

Convert to Real-name system

Most of the government's special actions concern the government mandate system real-name new accounts. This system will replace the current practice of Bank virtual account publishing. Virtual account issued by the bank for cryptocurrency exchange customers use for deposit and withdraw money.

As of January 30, the real-name system will be direct for deposit service and withdrawal to cryptocurrency account. The existing virtual account will be converted to real-name that at that time. Six major banks will implement new systems including Shinhan Bank, Nonghyup Bank, Kookmin Bank, Hana Bank, and Gwangju Bank.

Customers must open an account in a bank that provides a virtual account service for the exchange they use. "New members must be added after strict identification procedures," Kim was quoted by Joongang Ilbo. According to the document:

Users who do not have an account at the same bank as a virtual bank will not be able to make additional payments to the virtual bank [account], but they can withdraw money ... Foreigners and children under civil law can not use the name of the deposit confirmation and withdrawal of real service account funds.

AML and reported suspicious transactions

Earlier this month, the FIU and Financial Supervisory Service (FSS) conducted checks on the state premises of 6 major banks to ensure they had fulfilled their obligations of money laundering. The FIU then created a set of money laundering guidelines released on Tuesday.

Crypto exchange usually separates their funds from users of funds. However, government inspections revealed that "some exchanges were found to have collected funds from users through the accounts of public companies opened in the Bank", Kyunghyang Shinmun reported.

In some cases, customer funds are transferred into a bank account from a representative exchange. One exchange "raise funds from users through four bank accounts" to company accounts "and spend 58.6 billion won" from it, News outlet added. The financial authorities noted that this could lead to fraud and embezzlement.

By Hankook Ilbo described that the Bank is required to "monitor the Exchange [their Services] for unusual transactions in accordance with the guidelines and if suspected money laundering, further confirming the purpose of transactions and source funding," adding that:

If the number of transactions is more than KRW 10 million per day, more than KRW 20 million for 7 days, or frequent transactions in a short time, it must be reported to FIU, money laundering authority monitoring. If an exchange of money laundering risks or requires information, the bank may terminate the transaction.