The South Korean regulator says AML compliance is mandatory for crypto exchanges

Eun Sung-soo, chairman of the Financial Services Commission of Korea (FSC), said foreign cryptocurrency exchanges that trade Korean won must meet the country’s anti-money laundering standards.

According to Tuesday’s The Korea Herald, Eun made those comments when responding to legislative questions about the FSC’s plans to regulate the major crypto exchange, Binance.

Eun reiterated the need for overseas exchanges offering cryptocurrency trading pairs in won to meet the same anti-money laundering standards as the platforms based in the country.

As part of this compliance, these overseas exchanges must register with the Korea Financial Intelligence Unit, the FSC’s AML watchdog.

The statements made by the FSC President also give another clue to South Korea’s efforts to closely monitor the local cryptocurrency market. Back in April, the government announced an inter-agency operation to combat illegal cryptocurrency transactions, including money laundering and tax evasion.

As Cointelegraph previously reported, a recent investigation uncovered illegal crypto transactions abroad valued at $ 1.48 billion involving more than 30 people.

The Eun’s policy on registering exchanges is part of a revised law announced in March but is expected to come into effect in September.

Connected: Small South Korean cryptocurrency exchanges are facing increasing regulatory heat

In addition to AML compliance, exchanges must also use real name accounts trading. Therefore, platforms need to establish banking relationships with domestic financial institutions.

Currently only the “Big Four” – Korbit, Bithumb, Coinone and Upbit – meet the trading conditions for real names. Smaller crypto exchanges are said to have difficulties securing banking partnerships and risk being banned from operations after the six-month grace period has expired at the end of September.

Meanwhile, major South Korean banks are getting into the crypto custody business, with Woori being the latest financial institution to announce a custody product for crypto.