- Upbit faces scrutiny as FIU finds 500,000-600,000 KYC compliance issues in license review.
- FIU inspections reveal potential fines up to 100 million won per KYC violation at Upbit.
- Extended review could impact Upbit’s license, raising industry-wide compliance concerns.
South Korea’s Financial Intelligence Unit (FIU) has uncovered numerous violations of customer verification procedures during its review of Upbit’s license renewal application.
Reports indicate that the FIU found between 500,000 and 600,000 potential cases of inadequate KYC compliance at Upbit, raising concerns about the exchange’s ability to renew its license.
FIU Investigation Reveals KYC Lapses
The FIU began on-site inspections of Upbit in late August. The authority discovered many instances where KYC protocols were not properly followed.
These protocols, mandated by the Special Financial Transaction Information Act, require virtual asset service providers to verify customer identities to prevent money laundering and terrorism financing. Among the issues cited, some accounts were reportedly opened with unclear identification documents, including blurred or incomplete names and registration numbers.
Despite the scrutiny, Upbit representatives declined to provide details, citing legal restrictions on discussing ongoing FIU processes.
Potential Penalties and Impact on Business
Violations of customer verification rules can result in fines of up to 100 million won per case under the Special Financial Transaction Information Act. With hundreds of thousands of suspected cases, potential fines could reach unprecedented levels.
The licensing process, required every three years for virtual asset service providers in South Korea, is receiving increased attention due to the extended review period. Industry experts believe the high number of flagged cases has prolonged the timeline, demonstrating the FIU’s commitment to thorough compliance.
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The FIU’s investigation will likely determine Upbit’s future operations. A decision is expected after a full review of the flagged cases. This decision has implications not only for Upbit but also for compliance standards across South Korea’s virtual asset sector.
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