South Korea’s Financial Intelligence Unit reveals plan to halt unlawful cryptocurrency platforms
South Korea is planning to increase its scrutiny of virtual asset exchanges by conducting inspections and blocking platforms that do not meet regulatory standards later this year. The Financial Intelligence Unit (FIU) has introduced a comprehensive “2024 Work Plan” to protect the Korean won market from unauthorized exchanges and improve anti-money laundering (AML) protocols. The plan includes consultations with the Policy Advisory Committee to gather expert opinions, and lawyers and accountants will be enlisted to support these efforts.
The FIU’s approach involves a two-phase inspection process. The first half of 2024 will focus on an initial assessment of money laundering risks and market functionality, while the latter half will involve a more thorough investigation targeting virtual asset operators that fail to comply with regulatory standards. The initiative will also evaluate major shareholders and apply stricter disqualification criteria for those with a history of legal violations or poor social credit.
The emphasis on aligning with the Financial Action Task Force (FATF) guidelines demonstrates a commitment to international best practices, particularly in preventing and halting suspicious transactions during investigations. South Korea is a major player in the global cryptocurrency market, hosting some of the world’s largest exchanges and accounting for a significant portion of global crypto trading.
Regulatory measures in South Korea are becoming stricter, with upcoming rules targeting crypto firms for allegations of fraud, embezzlement, and trust violations starting from July 19. Last year’s legislative proposals paved the way for severe penalties for market manipulation, including hefty fines and the possibility of life sentences for major infractions.
Known as the Virtual Asset User Protection Act, this new regulation prohibits market manipulation, illicit trading, and the exploitation of non-public information. It introduces the potential penalty of life imprisonment for generating illegal profits over 5 billion won. Additionally, it requires virtual asset exchanges to keep user funds in banks and store the majority of users’ digital assets offline to enhance the security and reliability of the digital asset ecosystem.
In response to the Coin Gate scandal, high-ranking public officials are now required to disclose their cryptocurrency holdings. This measure aims to improve transparency and accountability, addressing concerns of insider trading within the political sphere.
