Domestic virtual asset exchanges in South Korea are likely to face several punishments from financial authorities due to their violations of anti-money laundering regulations
Using a “first-in, first-out” policy, the financial authorities intend to apply institutional and personnel punishments and fines in the order that they carry out on-site inspections.
New regulations
The Korea Financial Intelligence Unit (FIU) intends to impose sanctions on the other virtual asset exchanges shortly after Dunamu, according to financial sources on the 24th.
Since the previous year, Upbit, Bithumb, Coinone, Korbit, and GOPAX have all undergone on-site inspections by the FIU to assess compliance with anti-money laundering requirements, including Know Your Customer (KYC) infractions.
As of right now, the majority of on-site inspections have been finished, and sanctioning processes, such as legal review and the formation of a sanctions review committee, are in progress. The exchanges that the FIU inspects first are currently under the “first-in, first-out” policy for punishment.
More sanctions incoming
Sanctions are probably going to be finalised in the same sequence since on-site inspections were done on Dunamu (August last year), Korbit (October), GOPAX (December), Bithumb (March this year), and Coinone (April).
However, because Bithumb recently underwent an extra on-site examination pertaining to its order book, it may be pushed to the end. Similar to Dunamu, the sanctions procedure will identify institutional and individual punishments first, then fines.
The market anticipates that the unlawful behaviours of the exchanges, such as KYC breaches and failing to report suspicious transactions, would be quite comparable, and that there wouldn’t be much of a difference in the severity of the consequences that follow.
An industry insider stated, ” I understand that the FIU conducted inspections in largely the same areas related to the Special Financial Transactions Act,” adding, “I believe the level of sanctions will not differ significantly from Dunamu’s.”
The history of Dunamu
Due to infractions of the Special Financial Transactions Act, Dunamu was suspended for three months, and its CEO received a disciplinary warning from the FIU in February. A 35.2 billion won ($23 million) fine was levied on the sixth.
It is anticipated that the remaining exchanges will likewise be subject to severe institutional and personal punishments. The penalty may amount to hundreds of billions of won. However, the quantity may change based on the number and severity of the infractions.
With sanctions still in place, it is doubtful that the FIU’s sanctions will be finished this year because they are still pending against the remaining four exchanges. It is anticipated that the majority of punishments will be finished by the first part of next year.
At the same time, the South Korean National Tax Service (NTS) has issued a warning that cryptocurrency assets stored in cold wallets may be confiscated as part of its increased efforts to combat tax evasion.
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