- Upbit faces sanctions for not meeting KYC and AML requirements in South Korea.
- 700,000 KYC violations found, risking a suspension of new customer sign-ups.
- Upbit’s unreported foreign operations are also under investigation for regulatory breaches.
South Korea’s Financial Services Commission (FSC) issued a warning to Upbit about potential sanctions. These sanctions could prevent Upbit from adding new customers.
The notice, sent on January 9th, stems from violations of know-your-customer (KYC) and anti-money laundering (AML) rules. Upbit, which controls over 70% of the South Korean crypto market, may face restrictions that could affect its business.
KYC Violations Trigger Regulatory Action
This warning from the FSC’s Financial Intelligence Unit (FIU) is part of a larger effort to address non-compliant crypto platforms in South Korea. The FIU says Upbit failed to follow KYC procedures. These procedures are crucial for verifying customer identities and preventing illegal activities like money laundering.
Related: Upbit Faces Regulatory Hurdles in South Korea Over KYC
A report from the Financial Services Commission found 700,000 instances where Upbit did not execute KYC protocols correctly. This shows serious problems with the platform’s compliance practices.
The law requires platforms to verify user identities and report specific financial transactions to prevent illegal activities. The FIU also issued a preliminary notice of penalties. These penalties could prevent Upbit from taking on new clients for up to six months.
If the suspension happens, existing users can likely continue trading on Upbit. However, Upbit’s ability to grow its user base would be limited during this time. This could reduce overall trading volume and market share.
Related: Upbit’s Market Power in South Korea Attracts Regulatory Flak
Unreported Foreign Operations Draw Scrutiny
Beyond the KYC problems, the FIU is concerned about Upbit’s dealings with unreported foreign crypto businesses. The platform allegedly conducted transactions with international exchanges that it did not report, violating South Korea’s Special Money Act.
Upbit claims these transactions were hard to track because of how blockchain works. But the FIU considers this a violation of regulatory standards.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
