According to Korean publication Yonhap, South Korea’s Financial Intelligence Unit (KoFIU) and the Financial Supervisory Service (FSS) are jointly inspecting banking accounts provided to cryptocurrency exchanges in six major local banks.
The report cites a senior official from state regulator Financial Services Commission (FSC) in revealing that KoFIU – Korea’s watchdog for money laundering and terrorist financing, and the FSS – the financial watchdog under the FSC, will carry out an ‘intensive probe’ into accounts between Monday and Thursday this week.
The six banks under the scanner are Woori Bank, Kookmin Bank, Shinhan Bank, NongHyup Bank, Industrial Bank of Korea and Korea Development Bank. The first four banks are Korea’s largest banks by assets while the latter two are government-run banks.
Specifically, the two authorities will check if the banks have been compliant with obligatory money laundering reporting protocols after offering services to the country’s local exchanges. The senior FSC official estimated a total of 111 bank accounts related to cryptocurrency exchanges with an estimated 2 trillion won ($1.8 billion) in combined deposits. ‘Each account is presumed to have generated up to millions of virtual accounts’, an excerpt from the report added.
Further, the inspections coincide with a wider agenda of curbing fiat inflows into exchanges and even shutter cryptocurrency exchange operators evading recently mandated rules through loopholes, part of authorities’ ever-increasing scrutiny of cryptocurrency trading in Korea.
As reported by CCN recently, the Korean government moved to propose a ban on all anonymous trading of cryptocurrencies like bitcoin in an ongoing crackdown on money laundering and financial fraud. “We will…resolutely respond to such crimes by slapping maximum sentences possible on offenders,” the government said in a late December statement, adding that authorities would “leave all policy options open, including closure of a cryptocurrency exchange when deemed necessary.”
The new rules will only allow trading for investors with matching account names at their banks and cryptocurrency exchanges. The complete ban on anonymous ‘virtual accounts’, to comply with ‘know your customer’ norms, is set to commence on January 20, 2018.