South Korean banks are set to take into account crypto exchanges’ privacy coin policies, the nationality of their customers, and the criminal history of employees, classing these as “high priority” items when conducting risk assessment checks on whether to partner with trading platforms.
As previously reported, crypto exchanges have until September 24 to partner with a domestic commercial bank that can provide real name-authenticated, social security number-verified fiat on/off services or close their doors.
But the government has told banks that they must accept 100% of the risk involved with partnering with an exchange – meaning that should a case of money laundering take place on a trading platform, their partner bank would have to absorb the blame.
After the financial regulator this week essentially told the banking sector to stop moaning and accept their fate, banks have responded by beefing up the criteria they will use to assess crypto exchange partnership requests.
Per Yonhap and Biz Watch, a South Korean banking federation unveiled a risk scale for banks wishing to calculate the precise amount of danger involved with a potential partner exchange.
The scale comprises the following elements:
- Data security certification
- How effectively deposits, tokens, and transaction details for each customer are managed
- Whether or not privacy-promoting tokens are listed
- History of embezzlement and/or fraud by senior executives and employees
- History of hacking
- Nationality of users
- Credit rating
- Number of tokens listed
- Number of “high-risk” customers
Banks have also been told to check how exchanges managed anti-money laundering (AML) risks on an internal basis, internal auditing policies, customer verification measures, and employee ID verification protocols.
Banks have stated that unless the government relaxes its stance on crypto regulation, it is probable that only the four exchanges that currently have “real-name” banking partners will make it past September 24.
Meanwhile, the operators of V Global, a domestic crypto exchange that police suspect is a front for a crypto Ponzi scheme worth some UD 1.75bn have suffered another blow. The police, who arrested four staff members including the firm’s 31-year-old CEO and at least two other executives, have referred all four cases to the prosecution service.
Yonhap reported that prosecutors will likely announce whether they will seek to indict the group on fraud charges later this month – after customers complained they were promised outlandish returns on their stakes.
Police said that the CEO had been enjoying a “lavish lifestyle” prior to the arrest.
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