South Korea’s financial regulator is flexing its muscles with a series of new amendments to forthcoming crypto regulations – with new anti-money laundering (AML) provisos and a ban on privacy coin trading.
On Monday, Per Fn News and ZDNet Korea, as well as Paxnet, the regulatory Financial Services Commission’s Financial Intelligence Unit (FIU) – a specialist AML team – unveiled a detailed set of regulations to be put in force when the nation’s first crypto-specific legislation promulgates in March next year.
In a blow for privacy coin operators, tokens like zcash (ZEC) and monero (XMR) will be officially banned under the new rulings, as the FIU vowed to eliminate “all forms” of anonymity in domestic crypto trading.
However, no major South Korean exchanges currently list privacy coins, with monero the last privacy token to be delisted earlier this year. This followed a national backlash against the tokens, which were found to have been used by the operators of a brutal “members-only” rape and sexual exploitation video chat room hosted on the Telegram app.
Also, although many of the mentioned provisos cover the same sort of ground outlined in the original bill, one key development will involve the role of banks in the crypto sector.
Existing government guidelines require banks that provide fiat on-off ramp services to customers to make use of “real-name” crypto exchange accounts that are verified with social security numbers and other forms of identification.
These guidelines will become compulsory next year. But the FIU has added a new layer of regulation, stating that banks will become responsible for running AML risk assessment checks on exchanges (and their customers) – in addition to the AML requirements placed on exchanges themselves.
This will in effect hand yet more power to banks, who currently offer their services to exchanges on a rolling six-month contractual basis.
The FIU’s provisions also include an affirmation that exchanges keep their own fiat funds and those of their customers in separate accounts.
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