Virtual Cryptocurrency Services By Korean Banks Being Inspected

South Korean financial authorities report that they are currently inspecting six local banks which offer virtual currency accounts to multiple institutions.

The inspection will be carried out jointly by the Financial Supervisory Service (FSS) and the Financial Services Commission (FSC).

The co-inspection will check if the banks in suspect are adhering to the country’s anti-money laundering act and check if real names are being used to open these virtual currency accounts.

The six banks named in the joint inspection are Industrial Bank of Korea, NH Bank, Shinhan Bank, Woori Bank, Kookmin Bank and Korea Development Bank.

FSC Chairman Choi Jong-ku states that the main purpose for this inspection is to give guidance to these six banks. He clarified that the investigation is not because the banks are suspected of carrying out any illegal activity.

ARIRANG NEWS

The joint committee has issued a checklist to these six banks to provide guidance regarding cryptocurrency handling.

In a statement, Choi said

Virtual currency is currently unable to function as a means of payment and it is being used for illegal purposes like money laundering, scams and fraudulent investor operations. The side effects have been severe, leading to hacking problems at the institutions that handle cryptocurrency and an unreasonable spike in speculation

Cryptocurrencies such as Bitcoin and other virtual currencies have become a popular way to invest in South Korea. The South Korean government has expressed to the public its concern over the sudden increase of cryptocurrency investors. Most of these investors have gone the Bitcoin way and this has caused Bitcoin prices in South Korea to fluctuate dramatically. At the time of writing this article, the value of Bitcoin is pegged at $16,300 while in South Korea the average Bitcoin value is pegged at $23,400.

Choi states that since South Korea has some of the biggest and most attractive virtual currency exchanges in the world it has become a key target for hackers. The FSC chairman issued a warning this week and said that South Korean authorities will not be hesitant to dish out heavy punishments to those who are caught in market manipulation, pyramid schemes and money laundering.

Woori Bank released a statement and confirmed it would be fulfilling the checklist given by the joint inspection. The statement also confirmed that Woori Bank has officially stopped providing virtual account services from December as the increased costs for using real-name transactions had become too restrictive. The other banks are yet to release a statement on the join-commission inspection.

---