AML: anti-money laundering oversight has been stepped up by the South Korean government. So far, most of the crypto exchanges have been complying voluntarily, which is not the case of banks.
The government has made banks responsible for the monitoring and reporting of any crypto-related money laundering activities. Most of the banks have been adding compliance officers just to meet up with the country’s AML directives.
The Korea Times reported on Friday that the NH Nonghyup Bank “recently created an independent unit exclusively to handle compliance-related issues.” The report added that the bank has increased the number of its employees working in that unit from 16 to 23.
The Joongang Daily noted on Saturday that: “Despite the effort, Korea’s financial watchdog, the Financial Supervisory Service [FSS], warned that the bank has not sufficiently improved its internal control system.”
In order to boost AML measures with respect to cryptocurrencies, South Korea has been working hand in hand with the US. The Korea Times described: “U.S. Treasury Secretary Sigal Mandelker has discussed with FSC Vice Chairman Kim Yong-beom how to boost anti-money-laundering measures especially related to crypto-assets in addition to international cooperation measures.”
The US has found Korean banks’ AML measures inadequate. The Financial Services Agency (FSC), which is South Korea’s top financial regulator, said on Friday that the New York Department of Financial Services (NYDFS) “has notified the financial regulator of its plan to investigate Korean banks [with operations in New York] that are suspected of failing to meet compliance guidelines.”
The Joongang Daily has reported that Nonghyup Bank has already been fined by the US regulator, $11 million, “for inadequate control and a compliance system against money laundering.” They also added that the NYDFS “will start probes into six Korean banks operating in New York either by the end of this month or next month.” The publication elaborated in this manner: They are “Nonghyup Bank, Woori Bank, KB Kookmin Bank, Shinhan Bank and two state-run banks – the Industrial Bank of Korea and the Korea Development Bank.” “Since penalties from the New York DFS would damage the reputation of Korea’s financial industry in general, local financial regulators are also working to encourage the banks to strengthen their control and compliance systems.”
Banks that provide real-name services to crypto exchanges are on the list: Nonghyup Bank, Shinhan Bank, and the Industrial Bank of Korea. It is their duty to ensure that the crypto accounts they service are AML compliant.