The regulator believes that private cryptocurrencies pose a high risk of money laundering. The body amended the law to include FATF guidelines.
The South Korean Financial Services Commission (FSC) announced on Tuesday its decision to ban privacy-focused cryptocurrencies as they pose a high risk of money laundering. Consequently, Zcash, Monero, and Dash would be affected by the restrictions.
In its official document, the FSC reports that it amended its already existing Special Payment Law, including rules that legalize digital assets in the country. In this way, new provisions will come into effect in March of next year, and since then the exchanges that operate in the country will not be able to offer services with cryptocurrencies with privacy.
The South Korean regulator included the Financial Action Task Force’s guidelines to combat money laundering in the law, including the controversial travel rule. Therefore, virtual asset service providers or VASPs, including cryptocurrency exchanges, are a requirement to disclose customer information when facilitating an exchange of $ 1,000 or more.
The requested information requires the sender’s name as well as the recipient’s name, geographic address, and account details. For this reason, cryptocurrencies focused on privacy are excluded.
The South Korean Financial Intelligence Unit has even called private cryptocurrencies “dark currencies”, considering that their transactions are difficult to track, as The Daily Chain points out.
However, South Korea is not the only country that shows signs of intolerance with cryptocurrencies that guarantee the privacy of users. The United States government also signed a controversial contract with the Internal Revenue Service (IRS) to track down Monero, and this started a silent war against the most private cryptocurrencies in the ecosystem.
Monero enthusiasts are evaluating what alternatives they would have if a government, such as the United States, restricts privacy in cryptocurrencies or simply prohibits the use of privacy-oriented currencies.
The FATF move, which groups countries from the United States to China and bodies such as the European Commission, reflects the growing concern of international law enforcement bodies that cryptocurrencies as a tool to launder the proceeds of crime.
Countries will receive a forced registration and monitoring of cryptocurrency-related firms, such as exchanges and custodians, who will have to perform detailed checks on clients and report suspicious transactions, the FATF said in a statement.
By: Jenson Nuñez.
