In an effort to bolster regulatory oversight, the Financial Intelligence Unit (FIU) of South Korea has recently unveiled its ‘2024 Work Plan,’ with the aim of strengthening the reporting review and inspection of virtual asset exchanges. The plan includes introducing a preemptive transaction suspension system for suspicious transactions to curb criminal proceeds concealment.
The FIU’s proactive approach involves blocking attempts by ineligible virtual asset exchanges to enter the Korean won market. The initiative focuses on expelling exchanges that do not meet the stringent criteria set forth by the authorities. The FIU plans a preliminary review in the first half of the year, with a comprehensive assessment scheduled for the second half, taking into consideration money laundering risks, market operation capabilities, and user protection aspects.
The FIU has revised the Specific Financial Information Act, broadening reporting requirements from business operators and executives to major shareholders. The revised regulations also exclude individuals with a history of violations among the review requirements, incorporating social credit aspects such as debt default.
In addition, the FIU has proposed the introduction of a preemptive suspension of suspicious transactions, aligning with the Financial Action Task Force (FATF) standards. This system aims to swiftly detect and prevent crimes by suspending transactions during the pre-prosecution investigation stage.
The comprehensive inspection of virtual asset exchanges has already commenced, starting with the four major coin exchanges. Coinone is the first to undergo scrutiny, with subsequent examinations to follow. Under the Financial Services Commission, the FIU is meticulously verifying anti-money laundering efforts and the implementation of improvements raised during the report review process.
In preparation for the implementation of the Virtual Asset User Protection Act and large-scale renewal reports in the second half of the year, Director Lee Yoon-soo of the Korea Financial Intelligence Unit emphasized the importance of system improvements to strengthen reporting for virtual asset businesses.
In a related context, recent data from November had indicated a significant surge in the market share of South Korean exchanges. Traders in Asia, particularly South Korea, had been key contributors to the surprising rally in digital-asset market volume over the past two months.
According to data compiled by CCData, the market share of exchanges based in South Korea had surged to 12.9% in November, compared to 5.2% in January. This surge had coincided with an overall increase in trading volume during October and November.
Similarly, in early December, the Korean cryptocurrency market had witnessed an extraordinary surge in trading volume, with altcoins taking center stage amidst a backdrop of zero-fee promotions. Bithumb, one of the major players in the South Korean crypto space, had reported a staggering 24-hour trading volume of $907,315,910 and an eye-watering $147,607,919,035 over the last 7 days.