South Korea’s Financial Services Commission (FSC) announced yesterday it would be imposing penalties for crypto exchanges that fail to adhere to the set regulations
The Financial Service Commission of South Korea is set to penalise crypto firms for not complying with crypto regulations hefty fines. The announcement was made as a proposal currently up for notice until 20 April and will be implemented afterwards. The regulator also cited cases such as failure to conform to regulations around information and data retention, internal controls as well as identity verification of exchange users in the announcement.
Virtual asset service providers in the country are mandated to have a separate record of their users’ crypto transactions. Further, they are required to report any information related to suspicious transactions. The exchanges have also been asked always to verify the identity of their users.
“Financial institutions and VASPs will be subject to penalties if they are […] in violation of internal control duties (e.g. failure to report suspicious transaction activities), data maintenance duties (e.g. failure to keep relevant data on suspicious transactions), and duties specifically pertaining to VASPs (e.g. failure to keep separate management of customers’ transactions records),” the FSC wrote in the revised proposal.
Fines for the violation range between 30 million won (the equivalent of about $26,000) to 100 million won ($88,000). Beyond this, the proposal also brings new penalty standards on crypto exchanges and concatenates the pre-existing ones. It also ameliorates the set laws on penalty reduction to ease things for small-scale firms. The commission has a provision that reduces the penalties by almost half in cases like an erroneous breach.
“The revised regulation also introduces a new penalty abatement of fifty percent. For small-scale entities, penalty abatement can be granted in excess of the fifty percent limit.”
It appears the local crypto exchange Bithumb is ahead of the curve in terms of these regulations. The exchange had previously banned users from countries that have not implemented anti-money laundering rules from the Financial Action Task Force. Users from its adjacent neighbour North Korea and Iran are blacklisted, with Botswana, Pakistan, and Yemen being on the exchange’s watchlist.
It is worth noting the Ministry of Economy and Finance in the country, earlier on, announced a crypto tax of 20% that applies to investors whose gains transcend 2.5 million won (roughly about $2,200). However, the proposition was delayed, and a new deadline for January next year was set.