Revision Bill to introduce anti-money laundering requirements on cryptoassets moves ahead at National Assembly
Korea moves bill on cryptoassets
29 November 2019
The Financial Services Commission (FSC) has announced that the National Policy Committee of the National Assembly has approved a revision Bill on reporting and using specified financial transaction information on cryptoassets.
The revised bill is intended to impose anti-money laundering (AML) requirements on crypto-asset business operators and stipulates requirements with which financial institutions must comply in transactions with cryptoasset business operators.
Amongst other things, the key features of the revised Bill include the following:
- requirements for cryptoasset business operators – cryptoasset business operators will be required to report their transactions to the Korea Financial Intelligence Unit (KoFIU) under the FSC, subject to basic AML requirements (e.g. customer due diligence, suspicious transaction reporting, etc.), and to follow additional obligations such as keeping separate transaction details for users. If cryptoasset business operators fail to report to KoFIU, they may face criminal penalties of a maximum of five years of imprisonment or a fine of up to KRW 50 million;
- requirements for financial institutions – financial institutions will be required to conduct customer due diligence on crypto-asset business operators and check whether they report their cryptoasset business to KoFIU and maintain customer deposits in a separate account. If cryptoasset business operators fail to report their business to the KoFIU or are deemed as high-risk for money laundering, financial institutions will be obliged to refuse or terminate such transactions; and
- supervision and inspection – the KoFIU Commissioner will be in charge of supervision while the responsibilities for inspection may be delegated to the Financial Supervisory Service (FSS).
The FSC has indicated that the revision Bill will be reviewed by the Legislation and Judiciary Committee before it is presented at a plenary session for the final passage. If passed at the National Assembly, the Bill will take effect one year after its promulgation to give cryptoasset business operators and financial institutions time to adapt and prepare for the new regulatory regime.
The Bill will also give existing cryptoasset business operators a six-month transition period to report to KoFIU after it takes effect.