With just months to go before the new legislation reaches into force demanding all of South Korea’s crypto exchanges to perform strict anti-money laundering (AML) policies, the race is now on to adopt answers ahead of time – and avoid falling dirty of the law.
So which AML solutions are South Korean crypto exchanges utilizing ahead of next year’s legal changes? And how might they impact customers?
Blockchain industry consultant and former banking sector employee Lee Jong-Cheol explained.
“The biggest crypto players seem very keen to roll out ‘convergence’-type solutions that will allow customers to clear initial AML and Know-Your-Customer (KYC) protocols quickly and at one fell swoop. Some even want to use blockchain-powered digital documentation or decentralized ID (DID) solutions or streamline using the same sort of processes banks use. They don’t want to sign up for an account to become prohibitively complicated – they will fight to prevent that.”
And Lee mentioned that smooth user experience was the priority for all more notable exchanges.
“AML solutions will likely be seamless. Customers won’t even notice that they exist, for the most part – unless they make the sort of trades that would raise red flags at a bank,” he said.
As announced by Daily, a few exchanges began developing their AML solutions in February, before the new law was even voted in.
Upbit announced that it has been operating with America’s Chainalysis and has been “building up” its AML system. Rival Bithumb, meanwhile, has paired up with a firm called OctaSolutions, which will provide customer verification solutions as part of a new suspicious transaction reporting (STR) system.
Both firms will also use of solutions provided by GTOne, a governance tech firm that currently offers AML-related services for central commercial banks in the country.
The additional two members of the traditional “big four” exchanges, Coinone and Korbit, have partnered with AML solution provider Able Consulting, a firm created by former AML specialists at Samil-PwC, a PricewaterhouseCoopers joint-venture – in addition to in-house development efforts that make use of AI technology.