The Financial Services Commission of South Korea, which is the top financial regulator in the country, is now introducing its new standards of penalty. It is for crypto exchanges in case they fail in implementing sufficient anti-money laundering measures.
The standards which got announced on Wednesday, is going to be effective from 20th April. It is going to align with the revised act of Korea on reporting and using Specified Financial Transaction Information, which is going to be effective from later this month.
Under these new standards of penalty, the virtual asset service providers are including crypto exchanges. They are going to be subjected to fines in case they are found violating three duties. The duties include internal control, data maintenance, and duties solely related to VASP transactions.
The penalties are going to vary from 30% to 60% from the legally approved maximum amount. FSC is also going to introduce a reduction program of penalty for large firms with 50% and more than 50% of small firms.
These strict rules are explaining the reasons why Bithumb, which is the second-largest crypto exchange in South Korea, tightened their KYC and other AML measures this Tuesday. The exchange has now banned accounts of those users who are staying in various regions, which are not adopting AML measures, such as Iran and North Korea.
It is not the first time that FSC is introducing such stringent measures for crypto sectors. The regulators are now implementing a real-name account system, which needs users to submit a real-name bank account. Also, the information, including a local phone number, along with a residence permit, is needed for the opening of a crypto exchange account.
South Korea has also introduced a tax of 20% for those investors who are making more than 2.5 million.
South Korea has always been one of the most popular markets for cryptocurrency. As per the statistics of 2019, the country ranks second in crypto interests compared to the population, which means that South Korea is going to continue in large share, along with increased web traffic on its crypto exchanges.