South Korean Regulator Extends AML Compliance Deadline for Crypto Sector
The Financial Services Commission (FSC), South Korean government's top financial regulator, announces that it has decided to give South Korean crypto exchanges a short extension in their race to get anti-money laundering (AML) protocols in place. The new effective deadline will be 31 December 2021.
Earlier in November 2020, the FSC introduced a proposal of new rules to provide further details of anti-money laundering (AML) requirements on virtual assets under the revised Act on Reporting and Using Specified Financial Transaction Information. The new AML rules, which went into effect from March 25, 2021, require VASPs (Virtual asset service providers), to register their business with the Korea Financial Intelligence Unit (KoFIU) prior to the commencement of their business operation. Existing businesses that qualify as VASPs should register within six months (until September 24, 2021) and start complying with basic AML requirements or they will be subject to penalties.
KoFIU registration requires crypto exchanges to obtain Information Security Management System (ISMS) certification, demonstrate management structures to the regulatory Financial Services Commission (FSC) and obtain a real-name banking partner from the domestic commercial banking sector. However, to date, only Korea’s four largest crypto exchanges have been able to secure partnerships with banks as needed, and only 20 crypto exchanges have so far received ISMS certification. Thirty other applications are currently in queue waiting to be processed.
The extension is primarily being allowed to ensure regulators can process applications received before the 24 September deadline. The new effective date will be 31 December 2021.
The FSC stated that the move would allow it to “minimize the damage to customers that may occur as exchanges that fail to report to the authorities by the end of September subsequently shut down.”
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