The South Korean Government has released two set of guidelines for its cryptocurrency exchanges and banks.
The announcement was made by Vice Chairman of the Financial Services Commission (FSC), Kim Yong-bum.
Its government has been taking special measures to elimination cryptocurrency since December 28, 2017, and has come up with a set of guidelines prepared by Korean Financial Intelligence Unit (FIU), an FSC division, for all banks dealing with cryptocurrency accounts to follow.
The guidelines include:
1. Real-name system
This system will end the anonymous transactional practice that was followed up till now to help trace criminal activities and speculations. The current practice adopted by banks include "virtual accounts" issued by banks to withdraw and deposit money.
The new guidelines issued by the South Korean government will convert the virtual account to real name account and will be live from January 30th, 2018. Shinhan Bank, Nonghyup Bank, Kookmin Bank, Hana Bank, and Gwangju Bank are 6 major banks that will follow the new norms.
Those who do not have an account with their virtual banks cannot make additional payments but can withdraw money. The Real name account cannot be used by foreigners and minors.
2. Anti-money laundering
On investigation the South Korean government found that Crypto exchanges did not keep their funds separated from that of its users, as usually practiced. Exchanges were found to have collected funds from users through corporate bank accounts.
To curb this practice banks are now required to monitor the exchanges they provide services to for unusual transactions that are not in line with the guidelines. Suspected money laundering requires further confirmation on the transaction purpose and funding source. If the exchange has a high risk of money laundering or requires information, the bank may terminate the transaction.