Important takeaways
- Upbit faces potential suspension and fines due to AML and KYC violations.
- The Financial Intelligence Unit found 700,000 KYC procedure errors on Upbit.
Upbit, which dominates South Korea’s crypto trading market, faces potential business suspension and fines for violating anti-money laundering (AML) regulations, particularly regarding its Know Your Customer (KYC) practices, Maeil Business Newspaper reported is Jan. 16.
On January 9, the Financial Intelligence Unit (FIU) of South Korea’s Financial Services Commission, which oversees anti-money laundering (AML) and counter-terrorism financing (CFT) compliance, issued a preliminary notice of sanctions against Upbit.
The sanctions could restrict the exchange from taking on new customers for up to six months, while allowing existing users to continue trading. Currently South Korea’s largest crypto exchange, Upbit handles over 70% of the country’s digital asset trading volume.
The move follows an investigation that revealed around 700,000 cases where Upbit failed to properly implement KYC procedures. Under the Financial Transaction Specific Information Act, violations can result in fines of up to 100 million won per case, Maeil said.
The FIU also accused Upbit of conducting transactions with unregistered foreign crypto companies, which violated local regulations.
In response to this claim, an Upbit representative said “it was difficult to determine in advance whether it was an unreported foreign exchange on the blockchain.”
Upbit has until January 20 to respond to the allegations. The Financial Intelligence Unit is set to hold a meeting on January 21 to finalize sanctions, which could include a temporary shutdown of their operations.
The sanctions could affect the renewal of Upbit’s business license, which has been under review since its expiration in October 2024.
