Discover how South Korea is escalating its fight against illicit cryptocurrency activities with rigorous inspections and new legal frameworks.
Intensified Scrutiny on Virtual Asset Exchanges
With an aim to protect the integrity of the Korean won market, South Korea is ramping up its oversight of virtual asset exchanges. The Financial Intelligence Unit (FIU) has announced a “2024 Work Plan” that will see platforms undergo stringent inspections. Those failing to meet the regulatory requirements may face a block. The FIU’s plan also involves the Policy Advisory Committee, which will assist in refining these regulatory strategies by providing expert insights.
Enhanced Anti-Money Laundering Efforts
As part of the crackdown, the FIU will bolster anti-money laundering (AML) measures. A two-phase inspection process is at the heart of this initiative. Initially, virtual asset operators will be assessed for money laundering risks and market functionality in early 2024. A more meticulous examination will follow, focusing on those who do not comply with the set standards. Legal professionals and financial experts will be integral in supporting this campaign.
Stricter Regulatory Compliance and International Standards
South Korea’s approach is not just about local enforcement but also aligns with the Financial Action Task Force (FATF) guidelines. The country is dedicated to adopting international best practices to prevent and stop any suspicious transactions efficiently. This commitment is crucial as South Korea is a major hub in the global cryptocurrency market.
New Regulations and Penalties
With the upcoming Virtual Asset User Protection Act, South Korea is set to introduce severe penalties for market manipulation and other infractions. This includes life sentences for generating illegal profits over 5 billion won. The Act also mandates that virtual asset exchanges must safeguard user funds and secure a majority of digital assets offline to enhance ecosystem security.
Promoting Transparency: Public Officials and Crypto Holdings
In the wake of the Coin Gate scandal, a new requirement compels senior public officials to disclose their cryptocurrency holdings. This regulation is designed to foster greater transparency and accountability, especially in light of insider trading concerns within government circles.
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