Strict reporting rules for crypto businesses in South Korea are set to come into effect with existing firms given six months to comply or face stiff penalties.
South Korea’s cryptocurrency regulatory space is set to become even more tightly regulated with the incoming laws on financial reporting for crypto businesses in the country.
According to Korea JoongAng Daily, South Korea’s Financial Services Commission has amended its financial reporting rules to include the cryptocurrency sector.
This amendment mandates all crypto businesses — exchanges, asset managers, wallet providers, and custodial platforms — to file records of their transactions with the Financial Intelligence Unit.
The FIU is an arm of the FSC responsible for Anti-Money Laundering oversight across South Korea’s financial ecosystem.
South Korea’s crypto reporting regulation will come into effect from March 25. Existing virtual asset service providers in the country will have six months to comply with the new regulatory paradigm.
As part of the compliance protocols, crypto service providers in South Korea must adopt robust customer identification protocols. Also, any suspicious transaction must be flagged and reported to the FIU for further money laundering investigations.
Virtual asset service providers in the country that fail to abide by the provision of the crypto reporting regulation before Sept. 24 could face up to 50 million won ($44,000) in fines or five-year prison sentences for their principal actors.
From March 25, new crypto service providers looking to establish a presence in the country will have to register with the FIU.
The incoming crypto reporting regulation is only the latest in a string of laws and guidelines related to cryptocurrency policing in South Korea.
As previously reported by Cointelegraph, the National Tax Service revealed on Monday that it had identified more than 2,400 individuals who were hiding their assets in cryptocurrencies to evade taxes.
Crypto exchanges are already sharing customer data with the NTS as the tax body looks to identify more tax evaders hiding their assets in virtual currencies.
Meanwhile, the country’s crypto tax rule will come into effect in January 2021. The law will see capital gains tax imposed on cryptocurrency trading profit above $2,300.