Stricter Regulation: Banks to Check Cryptocurrency Account Holders’ Occupation and Source of Funds | BusinessKorea

Monday, February 26, 2018

Banks will be required to go through an enhanced due diligence (EDD) process when cryptocurrency transactions are made by high risk customers who can run the risk of illegal transactions including money laundering.
Banks will be required to go through an enhanced due diligence (EDD) process when cryptocurrency transactions are made by high risk customers who can run the risk of illegal transactions including money laundering.
Seoul, Korea
18 January 2018 - 9:45am
Yoon Yung Sil

Banks are required to check the purpose of trading and the source of funds of cryptocurrency trading account holders in the future. They also need to share account information one another when cryptocurrency trading sites receive investors’ funds through corporate accounts. With the government deciding to require real-name cryptocurrency transactions by the end of this month, NH Nonghyup Bank will begin the issuance of new virtual accounts for cryptocurrency transactions on January 30.

An official from financial authorities said on January 17, “Some cryptocurrency trading sites deposit and withdraw investors’ money with corporate accounts or executives’ personal accounts, not virtual accounts issued by banks. It means that they are using these accounts to collect money which are highly likely to launder money. We will strengthen banks’ anti-money laundering duties on these accounts.”

Under the current financial transaction report law, banks have a duty of customer due diligence (CDD). However, they will be required to go through an enhanced due diligence (EDD) process when transactions are made by high risk customers who can run the risk of illegal transactions including money laundering.

For CDD, financial institutions check only a name, address and contact number of investors. For EDD, however, they also need to check an occupation, purpose of transactions and source of capital of investors. When customers don’t provide necessary information in the process, banks must refuse new transactions and stop transactions with existing customers.

In addition, banks will be required to share information on corporate accounts related to digital currency transactions one another. This is to share confirmed information as banks often opened accounts without knowing that they are related to cryptocurrency trading sites.

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