Key Takeaways
South Korea's financial regulator has warned foreign cryptocurrency exchanges offering services to Koreans to register before Sep. 24.
The regulator says that any firms that fail to report to the agency face prison time or a fine.
The mandate is based on the South Korean law that requires know your customer (KYC) for all cross-border fund transfers.
South Korea is cracking down on overseas crypto exchanges. The Financial Services Commission has warned 27 companies to stop serving South Korean nationals without reporting or having licensing norms in place.
South Korea Strengthens Overseas Crypto Trade Rules
South Korea is toughening its stance on overseas crypto exchanges.
The countrys Financial Services Commission (FSC) today confirmed it has notified 27 foreign virtual asset services providers (VASPs) active in the country to follow reporting norms.
As per a press release, several crypto exchanges and operators, whose names remain undisclosed, were ordered to report to the FSC's Financial Intelligence Unit before Sep. 24.
The FSC warned that exchange operators that fail to meet standard reporting requirements before the deadline must stop or face prosecution.
Non-compliant crypto exchange operators may face imprisonment of up to five years or a fine of 50 million South Korea Won, the equivalent of around US$43,500. The mandate is based on the South Korean law that requires know your customer (KYC) procedures for all cross-border fund transfers. In the press release, the agency said:
“The Act requires VASPs to register with the KoFIU as the law equally applies to foreign VASPs that conduct activities outside Korea but have domestic consequences within Korea.”
The FSC has also advised cryptocurrency users must check whether a foreign crypto exchange they are dealing with has reporting requirements in place.
In addition, the FSC plans to take measures such as blocking access to specific websites, as well as cooperating with foreign law enforcement agencies and financial regulators to penalize non-compliant exchanges. A note read:
“We plan to take measures such as blocking access to the site to prevent illegal business.”
One important development in this regard is the increasing regulatory oversight of cryptocurrency exchanges dealing with Koreans, as well as mandatory exchange licensing and KYC norms.
South Korean regulators recently set new restrictions on foreign remittances involving crypto assets to curb money laundering and fraud cases. The regulations were formulated after Korean banks flagged several suspicious fund transfers between Korean users and Chinese crypto exchanges.
Previously, the FSC had reported that only four out of 60 exchanges active in South Korea have implemented real-name identification.
According to reports, regulators around the world are moving forward to enforce strict reporting rules for crypto transactions. Such regulations are in line with the upcoming Financial Action Task Force (FATF) guidelines, which state that all crypto exchanges will be required to record data of individuals making cryptocurrency transfers above $3,000.