South Korea’s financial regulators on Wednesday announced they will carry out inspections on local banks’ operations with cryptocurrency exchanges to check their compliance with anti-money laundering (AML) guidelines.
The joint inspection by the Financial Intelligence Unit (KoFIU) and the Financial Supervisory Commission (FSC) will be requesting information regarding corporate accounts of crypto exchanges. Next month, the regulators will then examine whether banks’ activities with cryptocurrency operators are adhering to anti-money laundering rules, according to local news agency Yonhap.
South Korean officials are also looking at ways to reduce risks associated with cryptocurrency trading in the country, which could include shutting down institutions that use such currencies. The financial watchdog will be involved in the process of severing any illegal links.
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As reported by Finance Magnates earlier in January, the FSC launched an investigation into local banks providing accounts to clients dealing in cryptocurrencies.
The total number of accounts owned by exchanges is a mere 111, but the combined funds held in those accounts are estimated to be 2 trillion won ($1.8 billion). Each of these exchange accounts have themselves generated millions of virtual accounts.
The latest development comes amid Seoul’s shift toward tighter regulation for cryptocurrencies. South Korea – which has been particularly seized by Bitcoin mania — has also been scrutinizing digital currencies exchanges, which were recently hit with massive tax demands as part of ongoing efforts to control potential systemic risks.