According to the reports, FIU identified “concerning matters” with the documents submitted by Crypto.com related to anti-money laundering compliance.
Crypto.com, a leading crypto exchange, halted its plans to launch in South Korea. On April 23, the company postponed its entry into South Korea. The delay comes after the South Korea’s Financial Intelligence Unit (FIU) visit to Crypto.com local office, raising potential concerns regarding Anti-Money Laundering (AML) compliance.
Korea’s southern region hosts one of the world’s largest crypto marketplaces, with around 10% of the population actively investing in digital currencies. However, this thriving sector faces strict rules. Major international exchanges like Crypto.com and Binance encountered substantial challenges when trying to directly enter the Korean market.
“Korea is a difficult market for international exchanges to enter,” acknowledged a Crypto.com spokesperson in a statement provided to Coinspeaker. “But we are committed to working with regulators to advance the industry responsibly for Koreans.”
Crypto.com Faces AML Compliance Issues in Korea
Crypto.com announced plans to launch a local trading platform in South Korea on April 2nd. This move aimed to fill the gap left by the closure of OkBit, a domestic exchange that Crypto.com acquired. At the time of acquisition, OkBit reportedly had around 900 customers. However, Crypto.com clarified that they have not onboarded any new clients from South Korea since the acquisition.
“OkBit maintained approximately 900 customers at the point of acquisition by Crypto.com, and OkBit has never been cited for any AML infractions.” said Crypto.com spokesperson.
The delay comes after Segye Ilbo, a South Korean publication, reported that authorities visited Crypto.com’s local office on April 23. According to the reports, FIU identified “concerning matters” with the documents submitted by Crypto.com related to anti-money laundering compliance.
South Korea’s AML and KYC Demands
South Korea’s strict regulations pose hurdles for global crypto exchanges. However, the regulations show South Korea’s commitment to reduce potential financial risks linked with digital currencies. Crypto exchanges wanting to operate in South Korea must prove they have robust anti-money laundering and Know Your Customer (KYC) verifications to get regulatory clearance.
However, this stringent oversight might actually drive advancement. South Korea has spearheaded the creation of regulatory guidelines for cryptocurrency trading platforms. Their approach could shape a more secure and responsible future for the worldwide cryptocurrency domain.
As Crypto.com engages with South Korean regulators, it will be interesting to see how they navigate these challenges and potentially adapt their approach to comply with local requirements. This could set a precedent for other international exchanges seeking entry into this crucial market.
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