The Financial Services Commission of South Korea (FSC) has introduced new rules according to which cryptocurrency exchanges will be fined for non-compliance with anti-money laundering (AML) rules.
Under the new rules, virtual asset service providers (VASPs), including cryptocurrency exchanges, will be fined if: VASPs do not track and report suspicious transactions; digital asset firms do not store relevant suspicious transaction data; VASPs are not capable of independently managing customer transaction records.
South Korea’s financial regulator said the rules will take effect April 20 after public comment. The new standards are focused on the revised law on reporting and use of information on financial transactions, which will take effect at the end of March.
South Korea has previously applied strict regulations to the digital asset industry. In 2018, the South Korean regulator ordered local banks to tighten control over the accounts of cryptocurrency platforms. In addition, from 2023, traders in South Korea will be required to pay income tax of 20% if their profits from cryptocurrency trading exceed 2.5 million Korean won (about $ 2,200).
With a high degree of probability, the upcoming rules were the reason that the South Korean cryptocurrency exchange Bithumb recently blocked the accounts of traders from 21 countries. These states do not take active action against financial crime, therefore they are under the scrutiny of the Financial Action Task Force on Money Laundering (FATF).