A year after passing one of the world’s first comprehensive crypto laws, South Korea has reaffirmed its commitment to stamping out financial terrorism and money laundering.
Imposing harsh fines of up to 100 million won ($88 million) for failing to retain details on suspicious transactions, crypto firms find themselves inundated with the cost of compliance.
However, Virtual Asset Service Providers (VASPs) might find themselves in a better position asking—What is the true cost of non-compliance?
Jeff Kang, Korea Country Manager at CoolBitX, an international blockchain security company, and creators of Sygna Bridge, the market-ready FATF-Travel Rule solution, weighs in:
“With increased oversight of South Korea’s FSC on data collection and identity verification for cryptocurrency transactions, it is increasingly necessary for Virtual Asset Service Providers (VASPs) in Korea to build on their compliance efforts in order to prove their legitimacy and ability to meet local regulatory requirements.
While the implementation time and cost of compliance solutions might bog down smaller to medium-sized VASPs, the heavy fines imposed by the FSC for failing to report suspicious transactions and flag suspect accounts will be an even heavier cost to bear, essentially narrowing their operating margins. The reputational costs incurred for non-compliance could also result in the loss of trust from consumers and regulators, as we have seen across the global industry.
As the South Korea authorities step up their regulatory efforts this year, while the FATF approaches its second 12-month review on the global crypto industry, the industry can look forward to continuing on its growth trajectory, as institutional and mainstream adoption of cryptocurrencies ramp up in the year ahead.”
Sygna Bridge helps global VASPs—including those in South Korea—meet the Financial Action Task Force (FATF) Recommendation 16’s “Travel Rule” guidance. It recently released its Wallet Address Filter API—a service that distinguishes between custodial and private wallet addresses, with the developing need from regulators to identify and flag suspicious transactions to private wallets.
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