Financial Authorities to Strengthen Customer Due Diligence for Nonprofits and Exchanges: "Transaction Source and Purpose Must Be Verified"

Starting in June, nonprofit organizations and virtual asset exchanges will be allowed to sell virtual assets, and customer due diligence will be strengthened.

On May 20, the Financial Services Commission announced that, in order to mitigate money laundering risks, virtual asset exchanges and banks issuing real-name accounts will strengthen customer due diligence for nonprofit organizations and virtual asset exchanges.

On May 1, the Financial Services Commission held the 4th Virtual Asset Committee meeting and finalized the guidelines for the sale of virtual assets by nonprofit organizations and virtual asset exchanges. This is a follow-up measure to the 'Roadmap for Corporate Participation in the Virtual Asset Market.'

Under this policy, virtual asset exchanges and banks issuing real-name accounts will specifically verify and validate the purpose of transactions and the sources of funds. In addition, virtual asset exchanges will verify and validate the sources of funds and the purpose of transactions for virtual asset deposits, while banks issuing real-name accounts will do so for transactions in which the proceeds from virtual asset sales are withdrawn from real-name accounts. Furthermore, virtual asset exchanges will monitor for money laundering risks, including crimes related to money laundering, among their nonprofit organization clients.

Regarding the frequency of customer due diligence, customer information such as address, contact details, and representative information will be checked and verified at intervals set by each institution within a one-year period. However, if a customer is assessed as high risk based on money laundering risk monitoring, the verification interval will be shortened accordingly.

The Korea Federation of Banks and the Digital Asset eXchange Alliance (DAXA) plan to prepare and distribute guidelines reflecting these measures to virtual asset exchanges and banks issuing real-name accounts within this month.

The financial authorities stated, "As a follow-up to the second phase of the roadmap for corporate participation in the virtual asset market, we are also working to announce measures for issuing real-name accounts to listed corporations and corporations registered as professional investors in the second half of the year," adding, "Additional anti-money laundering measures related to this will also be announced."