South Korea’s financial regulators said on Wednesday they will jointly carry out inspections on local banks’ operations with cryptocurrency exchanges to check their compliance with anti-money laundering (AML) guidelines.
The joint inspection by the Financial Intelligence Unit (KoFIU) and the Financial Supervisory Commission (FSC) will be asking for the information over corporate accounts of crypto exchanges. The regulators would look next month at whether banks’ activities with cryptocurrency operators are adhering to anti-money laundering rules, according to local news agency Yonhap.
South Korean officials are also looking at ways to reduce risks associated with cryptocurrency trading in the country, which could include shutting down institutions that use such currencies. The financial watchdog will be involved in the process of severing any illegal links.
As reported by Finance Magnates earlier in January, the FSC has launched a thorough investigation to get to the bottom of the events at the local banks providing accounts to clients of cryptocurrencies.
The regulatory bodies initiated this probe in December. The total number of accounts held by the exchanges is a mere 111, but the combined funds in those accounts are estimated to be 2 trillion won ($1.8 billion). Each of these exchange accounts have generated up to millions of virtual accounts.
The latest development comes amid Seoul’s shift toward tighter regulation for cryptocurrencies. South Korea — which has been particularly seized by Bitcoin mania — has also been scrutinizing digital currencies exchanges, which were recently hit with massive tax demands, as part of ongoing efforts to control potential systemic risks.