‘Only 4 Korean Exchanges to Be Left Standing’ in September, Warn Banks

[RSRS]

South Korean commercial banks “increasingly believe” only four crypto exchanges will survive beyond a September 24 deadline – after which crypto exchanges will need to adopt anti-money laundering (AML) protocols and find banking partners in order to keep operating.
The nation’s first piece of crypto-specific legislation promulgated in March, requiring all exchanges to adopt what had been guidelines on real name-authenticated banking. All crypto exchange customers will be required to hold fiat on/off ramp bank accounts at partner banks, with all transactions, fiat and crypto, monitored in real-time. At present only the “big four” exchanges (Upbit, Bithumb, Korbit and Coinone) offer such services, and time is running out for other exchanges hoping to join their number.

Banks in the country, as previously reported, are growing increasingly reluctant to work with crypto exchanges – as they have been told that they will need to absorb all money laundering and security-related risks. Some have already ruled out the possibility of teaming up with exchanges post-September 24.

Per Hanguk Kyungjae, banks were dismayed by comments made last week by the chairman of the Financial Services Commission Eun Sung-soo. Eun dismissed calls from bankers complaining that burdening them with the full extent of the blame in instances of money laundering was excessive and disincentivized crypto business. “For now,” Eun stated, it was only logical that banks conduct their own risk assessment checks and take on exchange clients at their own peril.


But banks fear that exchanges’ – or their clients’ – money-laundering missteps could bite hard. The media outlet quoted unnamed bankers as expressing fears that confirmed AML violations could eventually lead them to receive business suspension orders overseas, with branch closures in foreign territories a worst-case scenario.

One banker, who deals with real name-verified crypto exchange-linked accounts, was quoted as stating:

“If the regulators do not intend to exempt banks at all, the risk of conducting transactions with virtual asset service providers will increase as banks become extremely reluctant to authorize new transactions. It is impossible to form alliances with other new exchanges due to their verification speeds and the position the authorities are taking.”

Sourch