South Korea moves on the crypto front, thanks to the new recommendations of the Financial Action Task Force. South Korea's Financial Services Commission (FSC) intends to issue amendments to existing laws that make it mandatory for virtual asset service providers (VASPs) within the country to report their users' names.
The new more stringent measures
According to an FSC press release last week, the commission launched a proposal to update the law governing the privacy of South Korean citizens in financial transactions, tightening parameters on data reporting and the use of information, for the purpose. to help prevent money laundering.
The law defines VASPs as “corporate figures who engage in the purchase and sale of digital assets, and the exchange between digital assets”, as well as custodians, digital wallet service providers and intermediaries.
Such changes advanced by the commission mean that VASPs will have to use real-name registered accounts in their financial transactions with clients. Additional measures require VASPs to open accounts using real names with financial institutions, keep client deposits separate from their own, and obtain data security certification from the Korea Information Security Agency.
Furthermore, VASPs must not have suffered fines or other types of sanctions in the previous five years and must “manage” customer transaction records. An assessment of the money laundering risks associated with VASPs by financial institutions will also be required.
Not just cryptocurrencies in the regulator's aim
But virtual assets such as cryptocurrencies, which can be traded with easy-to-use software such as Bitcoin Revolution, are not the only assets targeted: the regulator also aims to change the regulations concerning digital tokens that cannot be exchanged for fiat currencies, electronic money, electronically registered shares, electric banknotes, commodities and more.
At the moment it appears that prepaid cards, gift cards and e-bonds are excluded from the virtual assets group. Last September, the Financial Action Task Force (FATF), the intergovernmental supervisory body on money laundering, issued a recommendation that more than 200 member regulators should profile cryptocurrency users in order to better identify criminal activity.
Last summer, the FATF also established regulatory standards, including the travel rule, stipulating that VASPs must transmit information on transactions above a predetermined value threshold to regulatory bodies responsible for the jurisdiction.
The FSC proposal was designed to impose anti-money laundering requirements on VASPs in accordance with the recommendations of the FATF and is not intended to adopt virtual assets in financial regulatory regimes, the regulator said. The FSC has announced that it plans to apply the changes in the law starting March 25, 2021.
