Press Releases - Financial Services Commission

Press Releases

Period: start
~
end

1month 3month Reset

Requirement

Mar 17, 2020

Revision Act on Crypto Assets Passes at Cabinet Meeting

The revision to the Act on Reporting and Using Specified Financial Transaction Information was approved at a cabinet meeting on March 17, 2020. This revision act will place Korea’s legal framework on crypto assets more in line with international standards set forth by the Financial Action Task Force (FATF) and strengthen its AML/CFT regime.BACKGROUNDAmid growing concerns about the use of crypto assets in money laundering and other illegal activities, the FATF and the G20 worked on a revision to the international standards and urged each country to adopt the revision. The Korean government introduced a revision bill in November last year to reflect this change, and following the passage of the revision act by the National Assembly on March 5 this year, the government approved the revision act at a cabinet meeting today.KEY FEATURESI. REQUIREMENTS FOR CRYPTO ASSET BUSINESS OPERATORSCrypto-asset business operators will be a) required to report their transactions to the Korea Financial Intelligence Unit (KoFIU), b) subject to basic AML requirements (e.g. customer due diligence, suspicious transaction reporting, etc.), and c) bound to follow additional obligations such as keeping separate transaction details for users.II. REQUIREMENTS FOR FINANCIAL INSTITUTIONSFinancial institutions dealing with crypto-asset business operators will be required to conduct customer due diligence on crypto-asset business operators and check whether they report their business tow KoFIU and maintain customer deposits in a separate account.If crypto-asset business operators fail to report to the KoFIU or are deemed as high-risk for money laundering, financial institutions are obliged to refuse (or terminate) such transactions. III. SUPERVISION INSPECTIONThe KoFIU will oversee the supervision and may delegate the authority of inspection to the Financial Supervisory Service.The revision bill will take effect one year after promulgation, and the current crypto-asset business operators will be g
Attachment 1
Nov 27, 2019

Revision Bill to Introduce AML Requirements on Crypto Assets Moves Ahead at National Assembly

The National Policy Committee of the National Assembly approved a revision bill on Reporting and Using Specified Financial Transaction Information on Crypto Assets on November 25. The revised bill imposes anti-money laundering (AML) requirements on crypto-asset business operators and stipulates requirements with which financial institutions must comply in transaction with crypto-asset business operators.The revision bill will be reviewed by the Legislation Judiciary Committee before it is presented at a plenary session for the final passage. If passed at the National Assembly, the bill will take effect one year after promulgation.KEY FEATURES ► REQUIREMENTS FOR CRYPTO-ASSET BUSINESS OPERATORS Crypto-asset business operators are required to report their transactions to the Korea Financial Intelligence Unit (KoFIU) under the FSC; subject to basic AML requirements (e.g. customer due diligence, suspicious transaction reporting, etc.); and bound to follow additional obligations such as keeping separate transaction details for users. If crypto-asset business operators fail to report to KoFIU, they may face criminal penalties of maximum five years of imprisonment or fine of up to KRW50 million.► REQUIREMENTS FOR FINANCIAL INSTITUTIONS Financial institutions are required to conduct customer due diligence on crypto-asset business operators and check whether they report their crypto-asset business to KoFIU and maintain customer deposits in a separate account. If crypto-asset business operators fail to report their business to the KoFIU or are deemed as high-risk for money laundering, financial institutions are obliged to refuse (or terminate) such transactions.► EFFECTIVE DATE The bill will take effect one year after its promulgation to give crypto-asset business operators and financial institutions time to adapt and prepare for the new regulatory regime. It will also give existing crypto-asset business operators a six-month transition period to report to KoFIU after th
Attachment 1
Jan 23, 2018

Financial Measures to Curb Speculation in Cryptocurrency Trading

The FSC announced measures that only allow cryptocurrency trading through real-name bank accounts linked to cryptocurrency exchanges and introduced a guideline to prevent cryptocurrency-related money laundering (hereinafter ‘Cryptocurrency-related AML Guideline’), as part of the government-wide efforts to curb cryptocurrency speculation and prevent cryptocurrencies from being exploited for illegal activities.Real Name Policy in Cryptocurrency TransactionsBanks will switch to real name policy starting from January 30 that only allows cryptocurrency trading through real-name bank accounts linked to cryptocurrency exchanges. Under the new rule, users who want to make cryptocurrency transactions must have a bank account under their real name at the same bank with cryptocurrency exchanges. Those who do not have their real-name account at the same bank will only be allowed to withdraw money from their existing bank account. To make new deposits, they are required to open a new bank account under their real name at the same bank with the exchanges.These are intended to make sure banks indentify their customers and comply with their anti-money laundering (AML) obligations relating to cryptocurrencies. Minors under the age of 18 and foreigners will not be allowed to open new bank accounts linked to cryptocurrency exchanges to deposit their money for cryptocurrency trading. Once the real name policy comes into force on January 30, existing anonymous bank accounts that have been used to trade cryptocurrencies will no longer be in use.Cryptocurrency-related AML GuidelineThe KoFIU and the FSS conducted joint inspections from January 1 to 16 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 f
Attachment 1
Jan 08, 2018

KoFIU and FSS Inspect Banks over Cryptocurrency Trading Accounts

Korea Financial Intelligence Unit (KoFIU) and Financial Supervisory Service (FSS) started to carry out joint inspections today on six commercial banks that are offering trading accounts to cryptocurrency exchanges in Korea. The inspectors will look into whether the banks comply with their anti-money laundering (AML) obligations in their transaction with cryptocurrency exchanges; and whether they have in place appropriate measures to verify their customers’ identification in regard with cryptocurrency trading.Cryptocurrencies are highly likely to be used as a means to money laundering due to their nature of anonymity and non-face-to-face transaction. Particularly, the so-called ‘virtual accounts’ offered to cryptocurrency exchanges have been making it more difficult to identify real names of account holders, and leaving cryptocurrency trading more vulnerable to crimes and money laundering. In this context, banks are required to assume a greater responsibility as gate keepers to prevent such illegal activities using cryptocurrencies.Anti-money laundering measuresIn regards to the banks’ compliance with AML obligations, the KoFIU and FSS will inspect:1. whether they have in place internal controls and risk assessment in regard with money laundering risks by cryptocurrency exchanges;2. whether they conduct customer due diligence in regard with cryptocurrency exchanges;3. whether they have faithfully fulfilled obligations to report suspicious transactions.Real name verification systemTo make sure the ‘real name’ policy in cryptocurrency trading can come into force this month, the inspections will focus on:1. whether banks have in place electronic systems to check whether the name of a deposit account holder matches that of a virtual account holder;2. whether they have in place appropriate measures to stop transactions if cryptocurrency exchanges refuse to provide customers’ information;3. whether they have in place appropriate measures to refuse transaction
Attachment 1