South Korean regulators and parliamentarians are rapidly building up a legal framework that will help them police cryptocurrency exchanges, with non-compliant exchange operators potentially facing jail time.
Per news outlet Ilgan Today, the regulatory Korea Financial Intelligence Unit is seeking to amend the country’s key piece of anti-money laundering (AML) legislation, the Act on Reporting and Using Specified Transaction Information.
The amendment will force “cryptocurrency operators” to comply with AML measures, eliminate anonymous deposits and withdrawals, obtain information security management system (ISMS) certification and prove they are compliant with other police requirements.
The new amendment would force exchanges to produce reports proving their compliance. The amendment would stipulate that offenders could be jailed for up to five years, or pay hefty fines.
Once the amendment passes the plenary session at the National Assembly, it will become effective as of late 2020, and the media outlet states that exchanges will be expected to begin reporting to the regulator within six months.
The amendment also stipulates that if exchanges sense that a customer may be using their platform for money laundering purposes, they must immediately cease doing business with said customer.
The regulator claimed, per Hanguk Kyungjae,
“If the National Assembly approves the amendment, we will be able to implement international standards and enhance the transparency of [cryptocurrency] transactions."
Regulators are satisfied that the amendment – in addition to a separate amendment made to the Special Financial Transactions Information Act last week – will bring the country closer to meeting Financial Action Task Force (FATF) AML guidelines, and create a comprehensive set of policing measures for the nation’s exchanges.