South Korea is set to introduce strict new anti-money laundering (AML) and counter-terrorism financing (CFT) rules to its burgeoning crypto industry.

Yesterday, lawmakers in Seoul voted to amend the country’s existing Financial Information Act, passing a bill introducing stringent new rules. The amendment should be signed into law by the president within a couple of weeks, with some of its provisions coming into effect in one year, and the rest six months later.

Tough new rules for crypto companies

All VASPs (virtual asset service providers) will now be required to register with regulators and partner with a single bank for deposits and withdrawals. By linking virtual and traditional bank accounts, both of which must be registered to the real name of the user, authorities are hoping to make it easier to track illicit funds.

All systems used by VASPs will also need to be certified by the Korean Internet Security Agency – something that can take a long time and cost a lot of money, reflected by the fact that, so far, only a handful of companies have been certified.

Bad news for smaller businesses and ICOs?

Though larger businesses will probably be unphased by the new rules, it could signal the end for many smaller projects, especially initial coin offerings (ICO), that can’t afford the added costs in terms of money and time. It is expected this could lead to some market consolidation, as smaller exchanges merge or close down.

AYO.NEWS says:

The crackdown is the latest example of a country trying to comply with the new AML and ATF directives issued by the Financial Action Task Force (FATF). Just last week we reported that Hong Kong and Abu Dhabi had strengthened their crypto rules, while earlier in February Switzerland also slashed the reporting threshold for crypto transactions, and at the end of January Ukraine enacted similar rules.

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