Under the new rules, the ‘travel rule’ will apply to VASPs in respect of all virtual asset transactions worth more than KRW 1 million.
South Korea’s FSC (Financial Services Commission) has proposed new rules for VASPs (virtual asset service provider) to align their AML requirements with the FATF (Financial Action Task Force) recommendations.
The rules will be introduced under the revised Act on Reporting and Using Specified Financial Transaction Information, which is scheduled to take effect on 25 March 2021.
The revised Act defines VASPs as business entities which engage in the purchase, sale, exchange, transfer, safekeeping, administration of virtual assets, or involving the intermediation or brokering of virtual asset transactions.
Under the Act, the ‘travel rule’ will apply to VASPs in respect of all virtual asset transaction worth more than KRW 1 million, whereby the originating VASP will be required to provide the beneficiary with detailed information about such transfers.
The travel rule will apply starting from 25 March 2022, to allow VASPs enough time to introduce common solutions for information sharing, the FSC said.
The Act also sets out requirements for VASPs to only use real-name accounts in their financial transactions with customers, and prescribes requirements for VASPs to open real-name accounts with financial institutions.
To open a bank account, a VASP must demonstrate that it segregates customer deposits, has obtained a certificate of Information Security Management System from KISA (Korea Internet & Security Agency), and has no record of fines and other penalties within the previous five years.
VASPs must also undergo an assessment of money laundering risks by their respective banks to open an account.
The proposed rules are open for comment until 14 December.