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According to the FSC, the crypto-focused bureau will improve the transparency in virtual asset transactions.
The Financial Services Commission (FSC) of South Korea and the Ministry of Interior and Safety have announced the formation of a dedicated bureau within the KoFIU (Korea Financial Intelligence Unit) for the supervision of the crypto sector.
As per the updated Special Financial Transaction Information Act, which came into effect in March with a six-month grace period, mandates all Virtual Asset Service Providers (VASPs) to register with the KoFIU for the compliance of Anti-Money Laundering (AML) requirements on customers due diligence, suspicious transaction reporting, and real-name accounts. The deadline for compliance has been set for 24 September 2021.
The FSC has stated that the new division will be composed of dedicated teams that will be responsible for the monitoring of virtual asset transactions, as well as the management and supervision of VASP activities, and their compliance with AML regulations.
“The proposal is intended to improve transparency in virtual asset transactions,” the FSC said. “The addition of working level personnel will strengthen the KoFIU’s capacity for inspection and analysis with regard to virtual asset transactions.”
The Korea Times also revealed that the new agency will have the authority to make decisions regarding licence extensions and will be exploring ways to strengthen investor protection rules. A policy management planning division will also sit within the new bureau.
Apart from this, the Korea’s Financial Supervisory Service (FSS) has published a list of VASPs that have and have not applied for ISMS certification as yet with the Korea Internet & Security Agency (KISA).
The purpose of the ISMS certification is meant to provide assurance on business resiliency, information security management systems, and the protection of information assets. The certification is mandatory for KoFIU registration.
The list reveals that 38% of the crypto exchanges that operate in Korea, (24 out of 63) have not yet applied for ISMS certification. This has raised concerns, as any crypto exchange that fails to register by the September deadline will be forced to close down its operations. The ISMS certification can be obtained approximately three to six months after an application is submitted.
Until now, only Upbit (Korea’s largest crypto exchange) has fulfilled the requirements and registered with KoFIU.
Suggested Read: New Crypto Regulations to be Followed by Korean Banks