Upbit Faces Investigation for Suspected KYC Violations in License Renewal
Top South Korean cryptocurrency exchange Upbit is under investigation for a suspected violation of customer verification requirements during its license renewal process. This raises concerns about Upbit's compliance with Know Your Customer (KYC) obligations.
KYC requirements are essential for tracking malicious activities, including anti-money laundering (AML) and terrorist financing. Crypto exchanges must verify users before allowing transactions on their platforms.
Alleged KYC Breaches Could Impact Upbit’s Business License
The Financial Intelligence Unit (FIU) of South Korea's Financial Services Commission (FSC) found between 500,000 and 600,000 potential KYC violations by Upbit. Local news agency Maeil Business Newspaper reported possible fines due to the high volume of cases, raising concerns about the impact on Upbit's business license renewal.
According to the South Korean Special Financial Transaction Information Act, virtual exchanges must renew licenses every three years. Concerns have arisen regarding the lengthy renewal process for Upbit, primarily due to the investigation duration for the cases identified by the FIU.
South Korean Financial Authorities Intensify Scrutiny of Cryptocurrency Exchange
The financial authority has been conducting onsite inspections of Upbit's renewal applications since late August. Inspections revealed instances where Upbit allegedly failed to implement KYC properly, such as opening accounts with blurred names and registration numbers, complicating user identification.
An Upbit official declined to provide further details about the ongoing issue with the FIU, citing the Specific Financial Transaction Information Act, which prohibits sharing information under investigation.
Concerns Grow Over Potential Fines and Delays in License Renewal
The alleged KYC breaches follow reports of an FSC investigation into Upbit for possible anti-monopoly violations related to its ties with K-Bank, which is under scrutiny for its involvement with cryptocurrency exchanges.
If any exchange violates customer verification requirements, fines may reach up to 100 million Korean won per case. The concern lies in identifying real violations among the hundreds of thousands of suspected cases, potentially affecting the exchange’s business license renewal.