The South Korean authorities has uncovered important Know-Your-Buyer (KYC) violations on Upbit, the nation’s largest cryptocurrency alternate.
On Nov. 14, native media experiences indicated that the Monetary Intelligence Unit (FIU) of the Monetary Companies Fee recognized these points throughout a routine enterprise license renewal overview for Upbit. The regulator has discovered between 500,000 and 600,000 potential KYC violations on the alternate to date.
KYC is a course of for verifying the id of consumers to adjust to anti-money laundering (AML) and counter-terrorism financing (CTF) legal guidelines. This sometimes entails registering actual names and submitting legitimate identification paperwork.
The FIU revealed that some Upbit customers offered insufficient identification for his or her KYC registration. In some circumstances, accounts have been opened with IDs that had blurry names and registration numbers, rendering the identities unrecognizable. This raises issues that these accounts might be used for cash laundering or different illicit actions.
Below South Korean legislation, corporations discovered violating KYC rules could face fines of as much as 100 million gained (roughly $71,600) per violation. Given the dimensions of the violations, there may be hypothesis in regards to the potential monetary penalty Upbit could face.
[Editor’s Note: At an average of 550,000 potential violations, this could theoretically amount to $39 billion in fines should the letter of the law be followed.]
Moreover, the violations might delay Upbit’s license renewal course of, which is presently below overview. In keeping with the Korean Particular Monetary Transaction Info Act, digital asset operators should renew their licenses each three years.
Upbit utilized for renewal in August, however the approval could also be postponed because the FIU assesses every case individually and determines applicable actions.
In the meantime, this new situation comes round a month after South Korea’s Monetary Companies Fee (FSC) revealed its intent to analyze Upbit’s market dominance. The authorities famous that the alternate makes up almost 20% of the 22 trillion gained deposits on Okay Financial institution which might be dangerous for the monetary establishment in the long run.
