September 28, 2021
South Korea Takes First Step to Regulate Virtual Asset Service Providers
Global interest in combating illicit uses of virtual assets continues to grow, and South Korea is setting a global precedent with sweeping regulations on its virtual asset industry. Although in line with anti-money laundering and counterterrorism financing recommendations from the Financial Action Task Force (FATF), these regulations failed to provide most Virtual Asset Service Providers (VASPs) with ample registration time, which will likely result in a monopolization of the South Korean virtual asset industry under a select number of VASPs.
Global interest in combating illicit uses of virtual assets continues to grow, and South Korea is setting a global precedent with sweeping regulations on its virtual asset industry.
Following coordination with the FAFT, the South Korean National Assembly amended the “Act on the Reporting and Use of Specific Financial Transaction Information” to require all VASPs to receive Information Security Management System (ISMS) certifications and partner with Korean banks to create “real-name” verified bank accounts for customers. Under the amendment, all VASPs, including foreign VASPs operating in South Korea such as Binance, are required to register with the Korea Financial Intelligence Unit (KoFIU) for license approval within six months, a period that ended on September 24. After the registration deadline, VASP operators who continue conducting business without the license will be subject to criminal and fiscal penalties, including prison sentences up to five years and/or fines up to roughly $42,000. However, the new government requirements involve more than just receiving a proper license as registered VASPs are required to follow anti-money laundering guidelines, including verifying customer identity and filing reports on suspicious and/or large currency transactions.
Read the full article from The Diplomat.
More from CNAS
-
Editor’s Pick: How Economic Warfare Impacts Energy
This week, we’re revisiting a conversation Jason Bordoff had with Eddie Fishman, adjunct senior fellow at the Center for a New American Security, about his book Chokepoints: A...
By Edward Fishman
-
Ziemba: Oil Markets in ‘Show Me the Outage’ Mode
Oil rose a second day on optimism over US trade talks ahead of next week’s deadline, and as tightness in diesel markets boosts sentiment. Rachel Ziemba, adjunct senior fellow ...
By Rachel Ziemba
-
Energy, Economics & Security / Technology & National Security
Don’t Let Tariffs Ruin America’s Quantum LeadershipMounting costs and bureaucracy are derailing U.S. quantum innovation....
By Constanza M. Vidal Bustamante
-
Edward Fishman: Weaponizing Finance and What It Means for Portfolios
Edward Fishman, adjunct senior fellow at the Center for a New American Security, explains how sanctions, chokepoints, and financial tools are redefining market risk and opport...
By Edward Fishman