<p>South Korea is ramping up its scrutiny on cryptocurrency exchanges, with the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) announcing its intention yesterday to remove platforms that lack the necessary qualifications, <a href="https://www.hankyung.com/article/202402128021i" rel="noopener noreferrer nofollow">according</a> to the Korea Economic Daily.</p><h2 id="header-0">Unqualified exchanges</h2><p>In its announcement yesterday, the FIU revealed its aim to block unqualified virtual asset service providers (VASPs) from facilitating trades in Korean won, the currency of the country. Those currently providing Korean won trading services will be eliminated from the market unless they can demonstrate they meet the required standards.</p><p>With many exchanges set to renew their registrations in the latter half of this year, the FIU is gearing up for thorough evaluations through June to identify and remove unqualified VASPs. The FIU’s assessments will focus on determining whether VASPs have adequate measures in place for user protection and are safeguarded against risks of money laundering. To bolster its efforts in preventing money laundering risks, the FIU intends to establish a framework where lawyers and accountants participate in crypto oversight activities.</p><h2 id="header-1">Examining majority shareholder of VASP</h2><p>The financial watchdog is also looking to propose amendments to the Financial Transaction Reports Act, aiming to raise the standards for VASP registration by introducing more stringent requirements. Beyond the current assessments of a VASP operator and its executives, the new regulations will involve close examination of its majority shareholder. This additional layer of scrutiny will evaluate the credibility of the major parties related to the VASP, taking into account factors such as their history of loan defaults.</p><p>The FIU is set to create a system for analyzing cryptocurrency transactions and will strengthen its communication channels, not just with financial institutions but also with prosecutors and police forces. Furthermore, the agency is reviewing the Financial Action Task Force’s (FATF) recommendation for freezing transactions in cases of suspicious activities. Once implemented, this will enable the FIU to temporarily halt suspicious transactions before bringing the issue to prosecutors.</p>

South Korea intensifies scrutiny on cryptocurrency exchanges

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