Conflict between Korea virtual asset service providers and Korea traditional banks?

While the government is collecting opinions from industry and experts for amendment of the enforcement decree until the 14th in accordance with the enforcement of the Specific Financial Transaction Information Act revised in March next year, it is clear about the issuance of real name verification accounts for investment in virtual assets and prevention of money laundering (AML). There are constant criticisms that it is confusing because there is no standard.

Virtual asset service providers that require real-name accounts as well as banks that issue accounts have demanded improvement, saying that there are no specific standards in laws and enforcement ordinances, adding to market confusion. However, the Korea Financial Information Analysis Institute (KoFIU) is confronting that it cannot accept the demand for specific standards, saying, "It is difficult to regulate uniformly."

■"Confusion without real name account and AML standards"

According to related industries on the 7th, the industry has been asking the government to clarify the standards for issuing real-name accounts since last month when the revised enforcement decree of the revised special payment law was announced.

In this regard, at a public hearing on the revision of the enforcement ordinance of the Special Money Act held by the Korea Financial Information Analysis Institute (KoFIU), Hwang Soon-ho, head of the Foreign Cooperation Team, and Jung Ji-eun, SC Bank's managing director, pointed out that the criteria for initiating real-name confirmation accounts should be clearer and more objective.

The current enforcement decree of the revised Specific Financial Transaction Information Act stipulates that banks identify and evaluate the risks of money laundering inherent in financial transactions of virtual asset providers based on the start of deposit and withdrawal accounts, which is a responsibility for the bank's subjective judgment. Therefore, it is necessary to alleviate the burden on banks by objectifying the conditions for opening deposit and withdrawal accounts through clearer standards.

Jung Ji-eun, executive director of SC Bank, said, "Because each bank has different standards for evaluating the fulfillment of AML obligations for customers, it would be nice if the criteria for issuing real-name confirmation accounts were defined so that they could exercise compulsory force when AML-related issues arise." It is suggested that there is a need for business regulations that contain clear responsibilities between the governments, and as an alternative, a plan to establish a transaction information sharing system between the three parties can be considered.” Managing Director Jung also pointed out that the simple guidelines and standards for issuing real-name accounts at the level of the Bank Federation's shared level are weak.

Regarding this, KoFIU Director Yo-seop Jeon said, "In order to clarify the standards for issuing real name confirmation accounts, there are opinions that the industry should present evaluation standards in the form of laws and orders, or reflect them in the terms and conditions so that they can be bound by contract." "There are aspects that it is difficult for the government to uniformly regulate because the AML evaluation standards and policies are different for each bank and there are no international standards." He also stressed, "For future needs, we will open a window of dialogue between banks and businesses so that they can be resolved, but the government has no plans to add more regulations."

The request for an extension of the validity period for reporting business operators is also demanding an extension of the validity period for notification of virtual asset business operators prescribed by the Enforcement Decree of the Specific Financial Transaction Information Act. In response to this, the government said, "If the validity period of a report is long, there are areas that cannot be covered in the inspection and supervision part, so we first set it to 3 years, which is the same as the validity period of the information security management system (ISMS)." You can also consider extending the period.”

Meanwhile, in the industry, the issue of reverse discrimination between domestic virtual asset providers and overseas virtual asset providers has also emerged. Since there is no border border in the virtual asset market, regardless of nationality, you can join overseas virtual asset exchanges and trade virtual assets spot and derivatives.

For this reason, some in the industry are concerned that the implementation of the revised Specific Financial Transaction Information Act will cause domestic exchanges to simply convert virtual assets and Korean won into a window for converting virtual assets and won, and that users will only conduct their actual investment activities abroad. In a situation where virtual asset futures trading is also banned in Korea, users are more likely to choose foreign exchanges with various investment options.

Regarding this, KoFIU Planning and Administration explained, "Even if you are a foreign virtual asset business operator, if you do business with a domestic person, you are clearly subject to reporting under the Specific Financial Transaction Information Act," and said, "We will try to resolve the effectiveness through international cooperation with overseas FIUs."

Do you think bank accounts really necessary for digital asset service providers?