The financial authorities will conduct the first inspection of virtual asset (cryptocurrency) exchanges in the KRW market, such as Upbit, Bithumb, Coinone, and Korbit. Customer verification obligations (KYC) and anti-money laundering systems are key inspection areas.
On the 16th, the Financial Intelligence Unit (FIU) under the Financial Services Commission announced the ‘2022 FIU inspection business operation direction’. Fintech, loan, and casino operators are also subject to inspection.
From February, the FIU, jointly with the Financial Supervisory Service, will inspect the establishment of an anti-money laundering system under the Specific Financial Transaction Information Act (Special Act) against virtual asset operators. First, we check whether the improvements and supplements raised during the virtual asset business registration review process are implemented, and check whether KYC and anti-money laundering systems are being implemented correctly. Depending on the need for inspection, it will be carried out sequentially, starting with the KRW market operator.
According to the results of the comprehensive inspection, sector inspections will be started from the second half of the year for businesses of interest. We plan to examine the adequacy of reporting suspicious transactions and implementing travel rules (duty to record information on senders and receivers of virtual assets).
According to the FIU, a total of 29 virtual asset operators have been reported and accepted so far. There are 4 KRW market operators that support KRW-based transaction services such as Upbit, Bithumb, Coinone, and Korbit, 20 coin market operators that can trade based on representative coins such as Bitcoin, and 5 wallets and custodians.
In addition, 5 operators, including 2 coin exchanges, 3 wallets and custodians, did not pass the examination. The financial authorities plan to re-examine these five companies within this month to confirm the subject of this year’s inspection and prepare a detailed inspection plan.
The FIU also inspects electronic finance and loan companies. 124 electronic financial companies and 60 loan companies two years after the anti-money laundering obligation was imposed. Companies with a low level of internal control compared to the money laundering risk according to the number of users and transaction size are selected as major inspection targets. Nine casino operators that have been temporarily suspended due to the closure due to the novel coronavirus (COVID-19) will also be tested.
An FIU official said, “With the Financial Supervisory Service, we will focus on the implementation of customer verification tasks, establishment of an internal control system, and appropriateness of various reporting tasks.” explained that
In addition, it is planned to check the adequacy of inspection tasks for the Mutual Finance Federation, unit unions, and post offices that have been entrusted with anti-money laundering inspections by the financial authorities under the Special Provisions Act. In February, the ‘anti-money laundering inspection business direction’ will be prepared, such as Δexpansion of the proportion of specialized anti-money laundering inspections, Δpromoting the professionalism of inspectors of consigned inspection agencies, Δselection of inspection targets reflecting risk assessment.
An FIU official said, “A new type of money laundering risk is increasing due to the digitalization of financial transactions and the advancement and intelligence of money laundering crimes.” We have prepared a business operation direction,” he said.
