Revision to Virtual Currency Anti-Money Laundering Guidelines

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The Republic of Korea’s Financial Services Commission (FSC) and the Korea Financial Intelligence Unit (KoFIU) approved, revisions to the Virtual Currency Anti-Money Laundering Guidelines introduced by the KoFIU in January 30, 2018. The revised Guidelines are expected to come into effect on July 10, 2018.

Currently, cryptocurrency exchanges have two types of separate bank accounts:

  1. one for collecting their customers’ money for cryptocurrency trading (hereinafter referred to as ‘money-collecting, and
  2. the other for parking their operational expenses (hereinafter referred to as ‘non-trading accounts’). At present, only money-collecting accounts are subject to enhanced customer due diligence (EDD) by financial institutions.  

The revised Guidelines will:

  1. require financial companies to strengthen monitoring on such non-trading accounts and conduct EDD if they find any sign of suspicious transactions, this will prevent cryptocurrency exchanges from using their non-trading accounts for collecting money or other illegal activities.
  2. require financial companies to share a list of overseas cryptocurrency exchanges as well as domestic ones and strengthen monitoring on money transfer to overseas exchanges in order to prevent tax evasion or money laundering through such transactions between domestic exchanges/customers between overseas exchanges.
  3. stipulate that financial companies shall reject or cease transactions with cryptocurrency exchanges ‘immediately’ when they report to the KoFIU such transactions as suspicious ones. The revision will also allow financial companies to reject or cease transactions when they are not able to conduct onsite inspections on cryptocurrency exchanges due to their incorrect address or contact information; or temporary/permanent closure.  

Flavio Cultrera