Post by miriammuraba on Aug 16, 2021 21:21:26 GMT 4
Due to their anonymity or pseudonymity, digital assets are perceived as entailing the risks of money laundering and financing terrorism. In October 2018, the Financial Action Task Force (FATF) adopted changes to its recommendations on financial activities involving digital assets, adding the definitions “virtual asset” (VA) and “virtual asset service provider” (VASP).
Since then, the FATF has adopted a risk-based approach to VA activities or operations and VASPs. This new approach includes the supervision of VASPs to ensure compliance in the areas of licensing and registration and preventive measures such as customer due diligence, transaction reporting and record-keeping. It also includes monitoring VASPs to combat money laundering and the financing of terrorism. Doing so enhances the effectiveness of sanctions and other enforcement measures, as well as international cooperation. VASPs, therefore, have the same full set of obligations as financial institutions.
VASP regulation in South Korea
In line with the guidance issued by the FATF recommending a risk-based approach toward the regulation of virtual assets and VASPs, Korea’s Anti-Money Laundering-related law, the Act on Reporting and Using Specified Financial Transaction Information, was recently amended and went into effect on March 25, 2021. Under the amended act, VASPs are required to register their business with the Korea Financial Intelligence Unit (KoFIU) prior to the commencement of their business operations, and existing businesses that qualify as VASPs are required to complete such registration within six months — i.e., by Sept. 24, 2021.
Also, upon registration, VASPs will be subject to various AML obligations, such as verifying the identity of their customers and filing reports on suspicious transactions. The financial authorities will conduct inspections of VASPs and supervise their compliance with AML obligations from the time of their business registration.
Under the act, VASPs are defined as virtual asset trading service providers, virtual asset safekeeping and administration service providers and virtual asset digital wallet service providers that are engaged in the purchase/sale, exchange or transfer, or safekeeping/administration of virtual assets, or intermediation and brokerage of some virtual asset transactions.
Korea Financial Intelligence Unit
The amended act also provides that any offshore activity outside South Korea that has domestic effects or consequences shall be subject to the act. Accordingly, the KoFIU has sent out notices to 27 offshore VASPs with business operations “targeting users in Korea” regarding their obligation to register with the KoFIU by Sept. 24. Whether the business operations of non-Korean VASPs are regarded as “targeting users in Korea” is likely to be a fact-specific determination based on factors such as whether they provide Korean-language translation service on their platforms, whether they perform advertising and marketing activities targeting Koreans, and whether they provide transactions and payment services in the Korean won.
Since then, the FATF has adopted a risk-based approach to VA activities or operations and VASPs. This new approach includes the supervision of VASPs to ensure compliance in the areas of licensing and registration and preventive measures such as customer due diligence, transaction reporting and record-keeping. It also includes monitoring VASPs to combat money laundering and the financing of terrorism. Doing so enhances the effectiveness of sanctions and other enforcement measures, as well as international cooperation. VASPs, therefore, have the same full set of obligations as financial institutions.
VASP regulation in South Korea
In line with the guidance issued by the FATF recommending a risk-based approach toward the regulation of virtual assets and VASPs, Korea’s Anti-Money Laundering-related law, the Act on Reporting and Using Specified Financial Transaction Information, was recently amended and went into effect on March 25, 2021. Under the amended act, VASPs are required to register their business with the Korea Financial Intelligence Unit (KoFIU) prior to the commencement of their business operations, and existing businesses that qualify as VASPs are required to complete such registration within six months — i.e., by Sept. 24, 2021.
Also, upon registration, VASPs will be subject to various AML obligations, such as verifying the identity of their customers and filing reports on suspicious transactions. The financial authorities will conduct inspections of VASPs and supervise their compliance with AML obligations from the time of their business registration.
Under the act, VASPs are defined as virtual asset trading service providers, virtual asset safekeeping and administration service providers and virtual asset digital wallet service providers that are engaged in the purchase/sale, exchange or transfer, or safekeeping/administration of virtual assets, or intermediation and brokerage of some virtual asset transactions.
Korea Financial Intelligence Unit
The amended act also provides that any offshore activity outside South Korea that has domestic effects or consequences shall be subject to the act. Accordingly, the KoFIU has sent out notices to 27 offshore VASPs with business operations “targeting users in Korea” regarding their obligation to register with the KoFIU by Sept. 24. Whether the business operations of non-Korean VASPs are regarded as “targeting users in Korea” is likely to be a fact-specific determination based on factors such as whether they provide Korean-language translation service on their platforms, whether they perform advertising and marketing activities targeting Koreans, and whether they provide transactions and payment services in the Korean won.