The Financial Intelligence Unit (FIU) of South Korea has announced publicly that, beginning in 2024, it will increase scrutiny over cryptocurrency exchanges and expel platforms considered “unsuitable” from the domestic market.
The Korea Times reported on February 12 that the FIU additionally aims to broaden the range of screening protocols utilized in the cryptocurrency market to avert unsuitable exchanges from infiltrating the domestic economy.
Preemptive trading suspension will occur even during the pre-investigation phase, as the regulator intends to implement this system on platforms already operational in South Korea and identify suspicious transactions. In addition to the recommendation of the Financial Action Task Force, 49 countries worldwide are contemplating the implementation of this measure.
Since 2021, the FIU has issued licenses to virtual asset service providers in South Korea. Corporations submit renewal applications for these licenses as their three-year mandates expire in 2024.
The FIU will assess the exchanges’ operational capacity, anti-money laundering infrastructure, and consumer protection measures before approving the new permits. Failure to pass the examinations will result in denial of registration.
As the implementation of the nation’s consumer protection legislation concerning virtual assets approaches in July, regulatory bodies are undertaking a comprehensive investigation. The FIU commissioner, Rhee Yun-su, stated:
“In preparation for the enactment of the virtual asset consumer protection act from the latter half of this year and the large-scale renewal registrations, KoFIU will agilely push forward with the necessary institutional improvements to ensure the seamless operation of the cryptocurrency industry.”
The National Assembly of Canada ratified the Virtual Asset User Protection legislation on June 30, 2023. By integrating nineteen measures on cryptocurrencies, the legislation establishes a unified definition of digital assets.
It imposes penalties for illicit trading activities, including using undisclosed information, market manipulation, and other unethical cryptocurrency trading practices.
According to South Korean media, the FIU reportedly investigated the cryptocurrency exchange OKX on February 7 due to allegations of unregistered operations in the country.
The Financial Services Commission, an additional Korean regulatory body, declared on the same day that crypto criminals who handle illicit proceeds exceeding $3.8 million could be subject to life imprisonment.
