- Most breaches concerned failures in buyer due diligence and identification verification processes.
- The motion coincides with experiences of a possible majority acquisition by Mirae Asset.
- The case reinforces stricter regulatory expectations throughout South Korea’s crypto sector.
South Korea’s year-end transfer in opposition to Korbit marks a decisive second for the nation’s digital asset business, as regulators sign that gaps in compliance will carry actual penalties.
On December 31, the Monetary Intelligence Unit closed an on-site investigation into one of many nation’s longest-operating exchanges with a major monetary penalty and management-level sanctions.
The motion, primarily based on findings from an October inspection, locations renewed give attention to how exchanges confirm customers, handle danger, and develop companies.
It additionally lands at a delicate time for Korbit, underscoring how regulatory self-discipline is shaping the way forward for South Korea’s crypto market.
The FIU introduced a 2.73 billion gained ($1.88 million) positive after figuring out practically 22,000 breaches linked to anti-money laundering and buyer verification obligations.
The violations had been uncovered throughout an inspection carried out between October 16 and 29, 2024, with the outcomes later reviewed by the Sanctions Assessment Committee.
Alongside the positive, the regulator issued an institutional warning and imposed particular person accountability measures on senior executives.
Inspection findings
A big share of the violations stemmed from failures in buyer due diligence.
The FIU discovered roughly 12,800 circumstances the place identification checks weren’t correctly carried out.
These included the acceptance of unclear or unverifiable identification paperwork, incomplete tackle info, and lapses in necessary re-verification processes.
In a number of situations, customers had been allowed to proceed buying and selling even after their danger profiles elevated, with out further checks being utilized.
Such practices run counter to necessities that higher-risk prospects be topic to enhanced scrutiny fairly than normal monitoring.
The assessment additionally recognized about 9,100 circumstances the place prospects had been permitted to commerce earlier than identification verification was totally accomplished.
South Korean guidelines limit transactions by unverified customers, making these circumstances a direct breach of core compliance requirements.
Accountability on the prime
Past operational failures, the enforcement motion prolonged accountability to management.
The FIU issued an institutional warning to Korbit, whereas the trade’s chief government obtained a warning, and its reporting officer was reprimanded.
This strategy displays a broader regulatory emphasis on governance and inside controls, the place accountability doesn’t cease at automated techniques or compliance groups.
As a substitute, senior administration is predicted to make sure that regulatory necessities are embedded throughout day-to-day operations and decision-making processes.
Abroad transfers and new companies
Regulators additionally highlighted weaknesses past buyer onboarding.
Inspectors flagged 19 digital asset transfers involving three abroad digital asset service suppliers that weren’t correctly reported.
South Korean guidelines require exchanges to reveal dealings with overseas entities and limit transactions with unregistered suppliers.
As well as, the FIU recognized 655 circumstances the place Korbit failed to hold out necessary cash laundering danger assessments earlier than introducing new transaction sorts.
These included companies linked to non-fungible tokens, an space of speedy development that is still topic to the identical compliance obligations as different digital asset merchandise.
Timing and sector influence
The enforcement motion comes simply days after experiences that Mirae Asset is alleged to be contemplating buying 92% of Korbit for as much as 140 billion gained ($97 million).
Korbit presently ranks because the fourth-largest trade amongst South Korea’s six included crypto platforms, inserting it firmly inside the regulator’s line of sight.
The FIU stated full particulars of the sanctions can be disclosed after a minimal 10-day interval for opinion submissions.
