How new laws targeting crypto will affect the industry

How new legislation targeting blockchain will affect cryptocurrency firms The industry is on alert as the enforcement provisions from the Act on Reporting and Using Special Financial Transaction Information and the final guideline by the Financial Action Task Force (FATF) is expected to be release in the second half. Recently there have been growing calls globally on the need to strengthen regulations against money laundering as well as penalties against violators. There’s even agreement on the need to establish a global standard on regulations as well as a task force. # Non-contact society, importance of customer risk management On June 16 a seminar was held on the subject of the special financial legislation and anti-money laundering (AML) and opportunities. At the seminar Park Man-sung, CEO of OCTA Solution, who is also on the advisory committee on the Financial Supervisory Service’s RegTech Forum, said with the era of non-contact has begun. Global society has been changing the regulatory framework for anti-money laundering, from risks management of transactions to managing customers’ risks. Park said cryptocurrency businesses now have to focus on the financial regulations. While monitoring suspicious transactions was important in the past, they should now be zeroing in on knowing who those people involved in the transactions are. # Heavy penalties for noncompliance Compliance with the anti-money laundering laws is incentivized by the heavy-handed punishment for violations. For example, if the cryptocurrency firm spots a suspicious transaction but does not report it to the authorities or fails to confirm the identity, the business faces a fine of 18 million won per case. Additionally, when falsely reporting on suspicious transactions or on exchanges of large amounts, the business operator could face a prison term of less than a year, a fine of up to 10 million won or both. # One could avoid being penalized when following the process accordingly Local cryptocurrency businesses have to be aware of the details if every country creates or strengthens regulations on cryptocurrency anti-money laundering per the FATF guidelines. Park said work on anti-money laundering systems is not a function but a process. He said if a company can prove that they have followed the process thoroughly when a problem emerges, they could avoid being penalized. Park said for this to work the companies need to establish a consolidated working system to prevent money laundering. “The important thing is to quickly recognized the risk, [and then] control and monitor it,” Park said. “[Companies] need to set up a consolidated anti-money laundering system that could support an established the process, automate it and have alarm functions.” # The Travel Rule — not an issue of technology but of agreement The industry attitude towards the travel rule, which requires confirmation on the identity of not only the sender but also the identity of the recipient, has recently been changing. “When the issue of the travel rule was first raised, there had been strong resistance, including blockchain companies such as Chainalysis, arguing that industry [would be] driven underground or countries that are not members of the FATF discriminated against,” Park said. “But recently more are leaning towards travel rules as the need for regulation in the cryptocurrency industry has been demonstrated.” Park said the travel rule is not an issue of technology but rather an issue of agreement. He said nothing is more important that would unite and prompt agreement between cryptocurrency business operators.

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