South Korea’s Financial Intelligence Unit (FIU) has reportedly launched an intensive review of Upbit’s operations over alleged non-compliance with Know Your Customer (KYC) requirements.
The regulator allegedly uncovered 500,000 to 600,000 cases where the country’s largest cryptocurrency exchange might fallen short in its customer verification procedures, according to local media outlet Maeil Kyungjae. The suspected lapses include blurred identification documents and improperly verified customer details.
These violations, if confirmed, could expose the exchange to regulatory penalties under the Special Financial Transaction Information Act.
The Act is a critical component of South Korea’s anti-money laundering (AML) and counter-terrorist financing (CTF) regulations, and it mandates strict KYC protocols to prevent illicit financial activities. Crypto exchanges must implement measures to ensure that real-name accounts are linked to verified identities before allowing deposits, trades, or withdrawals.
The scale of the alleged breaches suggests the exchange may be liable for record-breaking financial penalties. If the infractions are substantiated, Upbit could face fines of up to 100 million won (approximately $74,000) per violation.
The allegations have reportedly delayed Upbit’s business license renewal, which is typically required every three years for virtual asset operators in South Korea. Maeil Kyungjae reported that the regulator found these potential violations during its review for the renewal process, which began in late August. Given the severity of the case, the regulator’s new investigation will significantly prolong the process.
An Upbit representative declined to comment on the findings, citing legal confidentiality obligations under the Special Financial Transaction Information Act. The official noted that details of the FIU’s findings remain undisclosed even within the company.
Meanwhile, Upbit recently took steps to enhance its operational infrastructure by migrating its customer data to Amazon Web Services (AWS) servers based in the United States. The exchange claimed the move is part of its broader efforts to ensure regulatory and privacy compliance while mitigating risks of system failures, data breaches, and cyberattacks.
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