In a recent development, South Korea’s Largest Exchange Upbit is currently facing an FIU disciplinary hearing over alleged KYC violations.

According to the industry on the 16th, the Financial Intelligence Unit (FIU) of the Financial Services Commission will hold a sanctions review committee for Upbit on the 21st. It is expected that the level of fines and measures against executives and employees will be requested after Upbit’s explanation, etc. Notably, this is the first sanctions-level decision regarding issues discovered during an on-site inspection for the renewal of the virtual asset service provider (VASP). 

The Financial Intelligence Unit (FIU) has been inspecting Upbit since late August. During this process, they found at least 500,000 to 600,000 cases of suspected KYC (Know Your Customer) violations. These include accounts opened with blurry or unclear ID cards, making it hard to read the name or registration number.

It’s unclear whether these cases are actual KYC violations, and the fines will depend on Upbit’s explanation. The key issue is the relationship between KYC violations and money laundering.

Besides, South Korea plans to tighten its control over trade in cryptocurrencies in the country by mandating information disclosures for listed virtual assets and requiring issuers of reserve assets for riskier stablecoins.

The Financial Services Commission (FSC) revealed the initiatives during a Virtual Asset Committee meeting on Wednesday. Notably, once the working-level reviews are completed, legislative proposals will be prepared, with the goal of implementing them in the second half of the year. 

The new regulations aim to align the country’s rules with global standards while addressing domestic market challenges such as a more transparent cryptocurrency market system and enhanced investor protection. 

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