South Korean regulator to prevent money laundering through crypto

Over the years, the crypto industry has witnessed increasing crime using crypto assets. This is because virtual asset transactions do not require any intervention from third parties, making it easy for criminals to succeed.

However, more attention from regulators is coming to the crypto space. They aim to control the spread of criminal activities such as money laundering and terrorist financing using cryptocurrency.

These goals have driven most watchdogs to set up regulatory frameworks to track and ensure anti-money laundering (AML) compliance.

Regulator targets customers with large crypto holdings

The South Korean regulator has recently tightened its stance on maintaining AML compliance in digital assets. As a result, the country’s financial regulator, the Financial Service Commission (FSC), is now focusing on crypto whales.

Its focus is on investors with assets worth more than 100 million won ($70,000) to curb the use of digital assets in money laundering. The FSC observed that the risk of money laundering increases with greater holdings of digital assets and stablecoins.

The report by a local media mentioned that the watchdog is operating under new guidelines to combat money laundering. This involves keeping a close eye on digital asset whales with extraordinary holdings of stablecoins and other virtual assets.

According to the report, the use of stablecoins in money laundering is increasing. This is more pronounced with the stablecoins that are mainly used by the public. Furthermore, the report stated that an independently listed digital asset could fail the listing criteria of other asset operators.

Check tags on users who make large deposits

The South Korean watchdog has planned several processes to enforce compliance rules on the digital sector. In addition to watching whales and their digital activities, the regulator targets the flow of massive deposits.

The FSC plans to maintain checkmarks on digital coin users who make significant deposits. It stated that a close monitoring would be on customers who carry out huge crypto transactions. It will hold a quarterly check that will help highlight any notable change in users’ inventory during the period.

South Korea has distinguished itself through its strict stance on digital-related policies. The collapse of the Terra-LUNA ecosystem triggered the country’s high interest in controlling crypto operations.

When Terra crashed, many investors lost their investment capital and plans for return on investment. The effect on participants and the digital asset market in general was devastating, pushing regulators to take action.

Recall that the FSC executive reported that the regulator wants to speed up the review of 13 bills on virtual assets in August. These were for consideration by the national assembly in the country.

The country’s financial regulators have also increased their efforts to protect investors’ funds. Also, they are working on flagging crypto legislation by early 2024.

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