South Korea’s FSS Watchdog Warns 2 Banks for Lack of Crypto Trading AML Regulation Management


As South Korea has come in to the cryptocurrency market, they have been fairly strict about the regulations that exchanges and investors must adhere to. However, as the Financial Supervisory Service (FSS) has reviewed the local financial institutions, they have found that two major domestic banks are not doing their part in anti-money laundering (AML) enforcement and the management of crypto transactions.

Consumers in the area have been warned about the lack of compliance, noting that the two banks included are Kookmin Bank and Nonghyup Bank. The FSS’s review notes that they discovered “unreasonable elements related to virtual [currency] handling business.”

The article gives a little leeway to the banks, considering that the regulation standards are still unclear, and notes that the order is only applicable to the accounts that are not considered exchange accounts.

Since the review, both banks have orders that require them to adhere to the current regulations, and to provide proof of such actions to the FSS in the next three months. The article adds,

“If the FSS considers that the content is insufficient, the FSS will be able to impose more direct sanctions in the future.” However, there is still a problem with the “suspicious transaction extraction standard of Kookmin Bank's virtual currency handling business.”

The owners of the Nonghyup Bank, the National Agricultural Cooperative Federation (NACF) has already been approached by FSS to improve systems that related to the bank. This adherence will help make the criteria for suspicious transaction extractions applicable to all dealers.

When the year began, the FSS joined up with the Financial Intelligence Unit (FIU) to check out six of the major banks in the country, which included the aforementioned two institutions. Their goal was to determine if the banks

“carried out their obligations to prevent money laundering in managing virtual accounts.”

During the same month, a task force was established to monitor the compliance of crypto exchanges with the current regulations.

By springtime, three of the banks were up for inspection a second time to confirm that they were now abiding by the anti-anonymity regulations, which included Kookmin, Nonghyup, and one other. After the inspections, the AML guidelines were modified to include policies against suspicious transactions and payment processing, based on a report in June 28th by CoinTelegraph.

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