South Korean Exchanges Unite For Anti-Money Laundering Initiative
South Korea’s four largest cryptocurrency exchanges have set up a joint Anti-Money Laundering (AML) initiative. Bithumb, Coinone, Korbit, and Upbit claims the initiative aims to increase AML efforts and foster a healthier trading environment.
The move comes at the behest of the South Korean government, which cracked down on the crypto industry last year. The government announced in June 2018 that it planned to regulate local crypto exchanges like banks to ensure criminals do not utilize cryptocurrencies to finance illicit operations.
During an Anti-Money Laundering Policy Advisory Committee meeting, the Korea Financial Intelligence Unit (FIU) said they will oversee crypto exchanges and will impose the same regulations that are currently in place for banks.
“We plan to include virtual currency exchanges under a direct supervision of the AML/CFT (Anti-Money Laundering/ Countering Terrorism Financing) system,” the FIU said. “If a virtual currency exchange does not comply with these obligations, the FIU or the entrusted FSS [Financial Supervisory Service] will be able to inspect the monitoring system of the virtual currency exchange.”
The announcement by the four is a direct result of that declaration. A hotline dedicated to AML issues will be established among the four exchanges’ respective teams responsible for user protection and fraud detection. Wallet information involving trades with suspected connections to voice phishing, predatory lending, pyramid schemes, and other illegal activities will be shared in real time through the hotline, allowing relevant exchanges to protect their users by preventing further transfer of assets.
The exchanges are expected to operate a collective database of suspicious wallet addresses. In the case of a scammer looking to utilize various exchanges to disperse a large quantity of assets to the same wallet, all four exchanges will be able to identify and prevent such activities via the shared database.
Along with the Korea Blockchain Association’s self-regulatory framework and ISMS authentication by individual exchanges, the new initiative will serve a key role in improving the overall health of the industry. The four exchanges plan to expand the initiative and improve efficiency by including additional exchanges that share high AML standards.
