A financial watchdog in South Korea has put out a warning to two major local banks owing to lack of management of virtual currency transactions and anti-money laundering (AML) regulation.
The Warning by Financial Regulators
According to a recent report by local media outlet The Daily, the two domestic banks namely; Kookmin Bank and Nonghyup Bank were reviewed by the Financial Supervisory Service (FSS) and some “unreasonable elements related to virtual [currency] handling business” were discovered. Another angle noted by the article is that the regulatory standards are not clear, and the FSS order applies only to some accounts that have been contracted with a real name verification service as opposed to not crypto counterparty (exchange) accounts.
The banks were also given orders to improve their services and report back to FSS within three months showing their measures put in place. The article pointed out that: “If the FSS considers that the content is insufficient, the FSS will be able to impose more direct sanctions in the future.”
Also, it was noted by the article that some problems exist and could be better referred to as “suspicious transaction extraction standard of Kookmin Bank’s virtual currency handling business.”
“Improve Transaction Management System”
Nonghyup Bank is owned by the National Agricultural Cooperative Federation (NACF), and the FSS has implored the latter to improve the transaction management system so that all dealers would be adequately captured by suspicious transaction extraction criteria. Also to include virtual currency counterparts that have not signed a real name verification service contract with the NACF.
Earlier this year, the FSS and the Financial Intelligence Unit (FIU) inspected six of the country’s major domestic banks, (including Kookmin Bank and Nonghyup Bank) in order to decide whether or not the institution “carried out their obligations to prevent money laundering in managing virtual accounts.”
Also, the South Korean financial authorities formed a task force in January to ensure there is adequate oversight and inspection on cryptocurrency exchanges as it relates to compliance with the existing regulations.
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