#SouthKoreaCryptoPolicy

The KoFIU and the FSS conducted joint inspections on six commercial banks that offer bank accounts to cryptocurrency exchanges,1 and found a number of loopholes in banks’ compliance with AML regulations. Based on the results of our inspections, the KoFIU came up with a ‘Cryptocurrency-related AML Guideline’ to address such loopholes and clarify obligations and responsibilities of financial institutions to prevent cryptocurrency-related money laundering.

※ Summary of key points:

1. The guideline requires financial institutions to conduct enhanced due diligence (EDD) in transaction with cryptocurrency exchanges to make sure users’ money are in safe hands. The EDD requires banks to verify additional information for cryptocurrency exchanges: the purpose of financial transactions and the source of money; details about services that the exchanges provide; whether the exchanges are using real-name accounts; and whether the exchanges verify their users’ identification.

2. The guideline offers types of financial transactions deemed money laundering using cryptocurrencies.