South Korean crypto-exchanges set to implement FATF guidelines to curb criminal use of cryptocurrencies

Cryptocurrency exchanges across South Korea have started implementing guidelines put forward by the Financial Action Task Force in June. The implementation of these recommendations are meant to help curb the use of digital currencies for criminal activities. As per FATF guidelines, all virtual asset service providers need to be regulated to be in line with anti-money laundering initiatives and combating the financing of terrorism.

According to a report by The Investor, Lee Sir-goo, CEO of Dunamu, parent company of leading crypto-exchange, Upbit, believes that these recommendations would prove to be a boon for the cryptocurrency market and industry. He said,

“(Korea’s cryptocurrency exchanges) are at the nascent stage of discussion. We should take local players into account when implementing the requirements, but in such a way that the guidance works globally as well.”

The implementation of these FATF recommendations would be monitored by the Seoul-based exchanges’ advocacy group, Korea Blockchain Association.

Korea has a strict licensing and supervision policy for digital asset service providers

In order to operate as a digital-asset service provider in Korea, a firm must be licensed and registered with the country’s blockchain association and are subjected to regular supervision and monitoring. Apart from that, any crypto-service provider must have a real name bank account and their contracts with the commercial bank must be renewed every 6 months in order to use the national currency, Korean Won, on their exchanges.

Lee believes that the implementation of FATF guidelines would ease up the burden on commercial banks. He added,

“Burdens of banks that create accounts for cryptocurrency exchanges are likely to be relieved when FATF recommendation takes effect here.”

Lee went on to add that local exchanges would get much-needed relief from the mandatory use of bank accounts and cross-border remittance systems, using digital currencies.