The Korea Federation of Banks Releases Guidelines for Cryptocurrency Exchanges

Commercial Banks Switch from Private to Public Disclosure for Internal Evaluations of Cryptocurrency Exchanges Amid Controversy
Originally Confidential, Now Made Public

[Asia Economy Reporter Kiho Sung] The Korea Federation of Banks has developed a method to identify, analyze, and evaluate money laundering risks posed by virtual asset service providers and distributed it to each bank. Initially, the Federation planned to keep the evaluation method confidential as a reference material for banks to autonomously establish their operational standards, but due to increasing confusion in the industry, it decided to make it public.

On the 8th, the Federation stated, "The evaluation method divides the banks' money laundering risk assessment tasks for virtual asset service providers into stages such as mandatory requirement checks, inherent risk assessment, control risk assessment, risk rating calculation, and transaction decision-making, providing various evaluation indicators and methods as examples for each stage." Along with this, there are various evaluation indicators and methods that can be referenced at each stage.

In the mandatory requirement check, items that are mandatorily required according to laws and banks' anti-money laundering policies are exemplified and explained. These include whether Information Security Management System (ISMS) certification has been obtained, whether deposits, proprietary assets, and customer-specific transaction details are separately managed, and records of external hacking incidents.

The inherent risk assessment includes country risk, product/service risk, and risks related to high-risk customers.

The control risk assessment exemplifies evaluation indicators such as the level of compliance monitoring (AML) internal controls, establishment of internal audit systems, thoroughness of customer identification, and whether enterprise-wide risk assessments have been conducted.

Furthermore, it suggests determining whether to proceed with transactions after calculating the risk rating by combining the inherent risk and control risk assessments.

The Federation also clarified reports stating that if there are many customers with occupations that pose high money laundering risks, such as politicians, the likelihood of issuing real-name accounts is evaluated as low.

The Federation explained, "The evaluation method presents an example explanation of risk indicators related to high-risk customers by classifying customers' occupational groups into four levels and evaluating risk levels differently. This was prepared with reference to FATF Recommendation 12 (Politically Exposed Persons - Key Political Figures), revised in 2012, and Article 30 (Customer Type Evaluation) of the FIU's Anti-Money Laundering Regulations."

It added, "Politicians are classified as the third level among the four occupational categories, along with lawyers and accountants, and are rated relatively lower in terms of money laundering risk compared to other occupational groups," and said, "It is expected that the impact on the issuance of real-name accounts itself will not be significant."

This content was produced with the assistance of AI translation services.