FSC Announces Results of Inspection
The Financial Services Commission looked into 25 local cryptocurrency exchanges for one month until July 15 and announced on Aug. 16 that they are incapable of observing the Act on Reporting and Using Specified Financial Transaction Information.
“The exchanges have few or no personnel in charge of money laundering prevention, although they have internal rules to that end,” the commission explained, adding, “At present, their systems against suspicious transactions are insufficient in terms of detection, analysis and reporting to the authorities.”
Any cryptocurrency exchange intending to keep doing business in South Korea must report to the government by Sep. 24 with certain requirements met. Then, it must fulfill certain duties such as money laundering prevention by reporting suspicious transactions and the like. In addition, real name-verified deposit and withdrawal accounts are required for transactions based on the local currency, but banks are reluctant to provide such accounts as they may be punished with cryptocurrency exchanges in the event of a financial accident.
“The exchanges are also not enough in terms of internal control for stable trading management,” the commission went on to say, adding, “Specifically, their assessment of listed cryptocurrencies is insufficient, their public announcements lack important details such as financing information, and their cold wallet security is vulnerable to hacking attempts.” It also mentioned that some exchanges lack compensatory measures for user asset protection.