Korean banks are now under the regulation of the Financial Action Task Force(FATF). Subsequently, they suggested the high-intensity guideline for anti-money laundering(AML) against Chinese cryptocurrency platforms that uses ‘Bee Hive Accounts’ (Investment deposit directly to Corporate account). This alarms the Korean cryptocurrency industry as well.
Prior to this, FATF has officially announced a regulation guideline on cryptocurrency last month. According to this regulation, all of its members must switch all the cryptocurrency platforms businesses in the member nations must have license for cryptocurrency exchange in order to operate legally. In addition, identity of the people at the both ends of transaction must be reported.
Huobi Korea, an cryptocurrency exchange platform based in China, released on July 8th that the withdrawal limit hours after the initial deposit will change from 72 hours to 120 hours which is almost 2 times longer.
It means that if any deposit to Huobi Korea’s corporate account cannot be returned for 120 hours. During these hours, the platform and banks will investigate the source of the fund and legality. In addition, some of the investors may be requested to submit financial records. If it is not submitted, or the investor is suspected to be the illegal fund, the asset may be frozen for more than 100 days.
Huobi Korea insists, “It is a self-regulatory process to meet AML standard.” However, as the family relation certificate and the resident registry certificate other than bank records may be requested to deposit more than certain amounts in Huobi Korea, the industry sees it as the result of the guideline suggested by the bank industry. Under the current legal system, the banks issuing the account must be held responsible for illegal money laundering through cryptocurrency platforms.
Another anonymous Chinese exchange platform ‘B’ has been requested to employ the standard which states the 72 hours withdrawal limit for initial deposit and investor’s submission of resident registry certificate from their bee hive account issuing bank ‘C’. Investors using Chinese platforms became more fastidious because not only the identification but also the bank records need to be submitted.
The industry expects the current AML standard on Chinese platforms to be similarly applied to Korean platforms as well. It is largely due to FATF last month announcing, “All the cryptocurrency platforms must be informed of every participants’ legal identity.”
Anonymous personnel from the cryptocurrency exchange website ‘A’ which is in partnership with the same bank as Huobi Korea is said, “Though we have not received any notice from the bank yet, the new AML standard will be applied within a year, and it will likely to be preemptively applied on Chinese platforms. It will soon be on every platform with the bee hive accounts, whether they are Korean or Chinese.”
Some say the large exchange platforms such as Bithumb and Coinone will also be affected by similar regulation as well. It may be less stronger on the Korean personal identification process(KYC), but it will still be required to prove whether the fund is involved in money laundering or not by submitting each investor’s financial records.
Another personnel from one of the large Korean exchange websites said, “We are expecting to renew contracts with banks regarding issuance of ID authenticated bank accounts. FATF’s regulation will further require obligations regarding ID authorization and anti-money laundering. And the medium, small-sized platforms that cannot satisfy these standards will be practically regarded illegal in the market.”
Lee Suho(2019.07.08.) 은행권, 암호화폐 거래사이트 자금세탁방지 규제 ‘시동’
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