by Rubab Fatima
The South Korean authorities are ramping up its regulatory measures on the cryptocurrency industry as a number of crypto related crimes such as money laundering and fraud are on the rise. It is a move towards tougher measures that will guarantee security of a growing market and protect investors.
Recently, the Financial Intelligence Unit (FIU), under the Financial Services Commission (FSC) met to discuss more stringent Anti Money Laundering (AML) practices in the crypto space after serious cases of growing fraudulent activities.
Regulatory Gaps Prompt Urgent Action in Crypto
The meeting, hosted by the FIU head Park Kwang with officials from some 11 major financial institutions, including the Financial Supervisory Service (FSS) and the Ministry of the Interior and Safety were in attendance. The two worked together to get better at refining the AML inspection framework so it may tackle escalating risks and vulnerabilities in the crypto sector.
Over the years, local reports have highlighted how virtual accounts and fraudulent remittance schemes have been on an upward trend. South Korea, a nation that stands at the forefront of crypto trading globally, has a share of over 29 per cent of its global crypto trades and about four percent of its population engages in crypto investment. With the market expanding, authorities are being pushed more and more to fill regulatory gaps and avert financial crime.
The main outcome of the meeting was to form the People’s Livelihood Crime AML Joint Response Team. The financial institutions that this team is going to work with will also tell the security weaknesses in the crypto sector and make more measures to make it a bit more secured.
South Korea Reviews AML Rules for Crypto Exchanges
The government is also refreshing its robust inspection process to ensure crypto exchanges are abiding by stiffer rules to avoid loopholes by criminals to launder money and to conduct scams.
As the security of crypto platforms continues to come under scrutiny, this regulatory push has grown out of concern and comes on the heels of the $1.4 billion Bybit hack being one of the largest in crypto history. There is increasing demand for greater safeguards, but the businessman needs to find common ground between innovation and greater safeguards.
Meanwhile, South Korea’s FIU is also faced with legal challenges from Upbit, one of the country’s biggest crypto exchanges. The FIU ordered the suspension of business for its operator, Dunamu, because of the ongoing friction between governments and cryptocurrency exchanges.
This fits into global efforts to tighten crypto regulations as South Korea has done. The Securities and Exchange Commission (SEC) is in the United States working on regulatory frameworks to strike the balance between technological innovation and investor protection. On its part, the European Union is also reinforcing its crypto laws against increasing reports of security and fraud breaches.
As the global cryptocurrency market evolves, the regulators around the world are under pressure to develop comprehensive and effective rules which protect investors and maintain the market integrity.
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