In their quest to improve the local digital currency industry, South Korean regulators are rolling out initiatives to meet their objectives, and the latest in a string of efforts comes from the Korea Financial Intelligence Unit (FIU).
In a statement, the FIU confirmed that it will provide increased support for the service providers in the local digital currency sector. The anti-money laundering watchdog stated that its efforts would be geared toward preventing bad actors from using digital asset exchanges to facilitate crime.
At a meeting with leading digital currency exchanges, Lee Yoon-soo, head of the FIU, disclosed that the agency would improve its analysis of financial information linked to digital asset-related crime, collaborating with local law enforcement agencies.
“Since the role of virtual asset operators is very important as the primary gateway to prevent illegal acts, we plan to strengthen the legal compliance incentive system and improve the predictability of laws and systems to support operators in securing autonomous compliance capabilities,” said Yoon.
South Korea’s largest digital currency exchanges attended the FIU meeting, sharing their strategies for dealing with digital asset crime. Upbit’s representative disclosed that the exchange is relying on artificial intelligence (AI) to identify shady transactions, while Bithumb outlined an internal system for spotting illegally matched orders on its platform.
Coinone stated that its strategy for dealing with the threat of digital currency crime revolves around reinforcing its blacklist management and increasing surveillance of risky wallet addresses. Gopax has rolled out an emergency line for victims of phishing, while Korbit relies on a suspicious transaction report (STR) to prevent the occurrence of digital asset crime.
The exchanges pledged to meet regularly with the FIU every three months to deliberate on ideas around reducing digital currency crime while improving their compliance with existing regulatory standards.
The meeting follows the launch of a Joint Virtual Asset Crime Investigation Unit to improve upon the investigation and prosecution of digital asset offenses. The new unit, under the supervision of the Seoul Southern District Prosecutors Office, was launched with 30 investigators drawn from multiple Korean agencies, including tax and customs regulators.
Protecting Korean investors
As the country slowly recovers from the tragic collapse of the Terra ecosystem, the government is keen on preventing a repeat of the black swan incident, opting to strengthen its policing of the sector.
To foster investor confidence in the sector, South Korean lawmakers have rolled out new legislation for digital currency service providers to adhere to. The new legislation, which will come into effect in 2024, requires service providers to ensure proper custody of clients’ assets and insurance in case of security breaches.
In a separate legislation, public office holders are expected to make disclosures on the extent of their digital currency holdings to prevent potential conflicts of interest.
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