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Korea FSC Confirms Plans for Crypto-focused Bureau at KoFIU

Richard Marley
August 27, 2021
3 minutes read
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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.

South Korea’s FSC issued a so-called “death note”, announcing that one-third of the country’s crypto exchanges will likely have to cease operations, due to failed compliance requirements.https://t.co/zjjmaJRM9v

— Angie Lau (@AngieTVLau) August 26, 2021

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.

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Danish Gambling Operator Reports Tipwin to the Police for AML Failings
Then danish gambling operator Spillemyndigheden has reported Tipwin to the police for violating the Danish Money Laundering act

According to the sources, Spillemyndigheden, the government office based in Odense, Denmark, has reported to the police that the business has failed to create risk assessments of retail bets with a lack of written policies on its retail offerings.

It is also worth mentioning that the operator also lacks complete business procedures and controls for the offerings based on land or in regards to money laundering until 25 May 2022.

In the official statement of the regulator to the police, it stated all the shortcomings of Tipwin in compliance with the anti-money laundering standards. It stated: “Spillemyndigheden notes that the rules on risk assessment, policies and business procedures are absolutely fundamental in the Money Laundering Act. By failing to prepare a risk assessment, Tipwin has not had a useful tool that has provided an overview and understanding of where and to what extent Tipwin is exposed to money laundering or terrorist financing, and what measures are in place are necessary to mitigate the risks involved.”

This clearly states that the german based gambling operator, Tipwin is exposed to the illicit crimes of money laundering and terrorist financing and has failed to comply with the AML regulations. The Danish regulator also focused on the lack of preparation from the operator on assessments of risks which are fundamental components of the anti-money laundering act.

Spillemyndigheden also added: “Preparing a risk assessment of the company’s business model is a very fundamental means of limiting the risk of money laundering. Tipwin has thus also not had policies and operational procedures that stem from the risk assessment. By failing to prepare a risk assessment, the Gambling Authority has therefore handed over the case to the police investigation.”

The authority also launched an injunction on the breach of rules and procedures in regard to the online casino and betting operations. With the main emphasis on money laundering, the regulator released a statement last month which reminded businesses in the industry of the obligations. It mentioned the regulations most firms are complied with, which are in order to prohibit the financial interactions with individuals, groups, legal bodies or countries.

In addition, Spillemyndigheden issued a 3 months deadline to Tipwin to sort out the situation.

Suggested Read: Danish Gaming Regulator Sanctions Unibet Over AML Violations

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While Australia’s vulnerability to money laundering and organized crime is obvious, firms that incorporate a robust AML Screening solution can steer clear of both money laundering and regulatory penalties. AML/CFT regulations oblige businesses to identify the ultimate beneficial owners and individuals who perform transactions for corporate customers. The FATF advises businesses to verify the identities of their customers through document verification checks and analyse the risk associated with them.

Shufti Pro’s AI-backed identity verification and Anti-Money Laundering (AML) screening solutions allow financial firms to adopt a risk-based approach. The globally acclaimed company offers services in 230+ countries and territories that ultimately overcomes the data transparency issues identified by FATF. In less than a second, financial organizations can get 98.67% accurate identity verification results.

To learn more about Shufti Pro’s AML Screening solution, get in touch with experts.

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Korea FSC Confirms Plans for Crypto-focused Bureau at KoFIU

Crown and Star Casinos – A Stain on Australia’s Reputation

Australia’s Anti-Money Laundering Regime

How Casinos and Businesses Can Secure their Operations

What Shufti Pro Offers

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