Updated Crypto AML Rule in South Korea Set to Take Effect from 25th March
South Korea’s official financial regulatory body, the Financial Services Commission (FSC), announced that the updated rule mandating AML obligations on Virtual Asset Service Providers (VASPs) will come into effect on March 25, 2021.
The FSC initially called for cryptocurrency-based amendments to the country’s Anti-money Laundering (AML) framework in November 2020, in an effort to follow suit with the Financial Action Task Force’s risk-based approach to VASPs.
On 5th March, South Korea’s National Assembly also came onboard with the FSC’s proposal and voted in favour of the update. Soon after, government officials gave a green signal to the law at a cabinet meeting held on 16th March.
Thus, according to the revised “Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information”, the following amendments need to considered by crypto companies:
Scope of VASPs
Any virtual asset service provider and virtual asset digital wallet service provider that is involved in the buying and selling, exchange and transfer, administration and safekeeping, intermediation and brokerage of virtual assets and virtual asset transactions.
Registration of VASPs
Virtual asset service providers are obliged to register their business with the KoFIU (Korea Financial Intelligence Unit) prior to the initiation of business operations. To avoid being subject to hefty penalties, existing businesses that pass as VASPs must register within 6 months (i.e. till September 24, 2021)
AML Obligations of VASPs
As of 25th March, 2021, registered virtual asset service providers need to comply with anti-money laundering (AML) regulations, such as the verification of customer identity, filing reports on suspicious transactions, etc. Once the business is registered, authorities will be carrying out thorough inspection and supervision on VASPs to ensure they stay in compliance with AML requirements.
Additionally, the updated rule regarding customer identity verification applies only to registered organizations. Therefore, the FSC has advised customers to stay vigilant of unregistered VASPs and refrain from providing them with sensitive information prior to checking the status of their registration.