News

Regulators to Scrutinize South Korean Banks Over Crypto Accounts

0 Comments

South Korean regulators are training their guns on banks over their relationship with cryptocurrency exchanges. The banks will be investigated starting April over their compliance with anti-money laundering regulations, Yonhap News reports.

The Financial Supervisory Commission and the Financial Intelligence Unit are particularly interested in corporate accounts held by cryptocurrency exchanges, the report indicates.

The FSC Crackdown

South Korean banks to be inspected

As early as December, the FSC had indicated it would crack down on anonymous cryptocurrency trading.  The agency had then announced that cryptocurrency accounts must be linked to registered bank accounts.

This will be second inspection this year after a similar one in January. FSC Chairman Choi Jong-ku had then told a press conference the body was checking if banks were adhering to anti-money laundering rules and using real names. Six major banks were then inspected – Industrial Bank of Korea, Woori Bank, Shinhan Bank, Kookmin Bank, NongHyup Bank and Korea Development Bank.

The inspections had then been intended to be used to provide guidance to banks.

Woori Bank thereafter stopped providing virtual currency services citing prohibitive costs of operating real-name accounts.

As of December, there were more than 100 accounts associated with cryptocurrency exchanges with over $1.8 billion in deposits. Each account typically holds several virtual accounts.

The government is trying to tame the wild speculation around cryptocurrencies in the country. South Korea is a major centre worldwide for cryptocurrency exchange and trading.

A sizeable part of the population participates in the market with word usually spread by mouth. Government officials have repeatedly expressed concern about the trend. Because of the frenzy, cryptocurrency prices have remained markedly higher than the rest of the world.

South Korea a target for hacks

Cryptocurrency exchanges in South Korea have also been the target of hackers. Yobit recently shut down in December and filed for bankruptcy after being hacked twice

Kim Dong-yeon, the finance minister was however quick to clarify that the country would not ban cryptocurrencies in South Korea.

Public officials are however barred from holding or trading cryptocurrencies. An association of players in the industry has earlier this year announced it was inspecting some member for compliance with their set standards.

Add Comment

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.