The South Korean government is reportedly seeking to bring cryptocurrency exchanges under the direct supervision of the country’s Financial Intelligence Unit. This will obligate crypto exchanges to follow anti-money laundering directives like banks do. This is the first time a government agency has said it will oversee crypto exchanges.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
AML Obligations
The Korea Financial Intelligence Unit (FIU), under the supervision of the Financial Services Commission (FSC), recently held an Anti-Money Laundering Policy Advisory Committee meeting. The meeting was set up to discuss measures against money laundering and terrorism financing activities.
“We plan to include virtual currency exchanges under a direct supervision of the AML / CFT (Anti-Money Laundering/ Countering Terrorism Financing) system,” the committee was quoted by Maeil Business. Citing that “the legislation has already been introduced in the National Assembly,” the news outlet elaborated:
This is the first time government agencies have said they will oversee virtual currency exchanges…When the bill is passed, virtual currency exchanges will be obliged to monitor the suspicious money-laundering transactions and report them to the FIU.
The Need for Direct Supervision
Currently, the FSC and the FIU have no jurisdiction over crypto exchanges since cryptocurrencies are not considered financial assets. The regulators have to monitor money-laundering activities of crypto exchanges through banks.
With the proposed changes, according to the committee, “If a virtual currency exchange does not comply with these obligations, the FIU or the entrusted FSS [Financial Supervisory Service] will be able to inspect the monitoring system of the virtual currency exchange,” the publication conveyed.
According to the Hankyoreh, the FSS said that it will also tighten its oversight of banks that provide virtual accounts to crypto exchanges. For example, banks must
