With the South Korean government preparing to implement know-your-customer (KYC) and anti-money laundering (AML) compliance processes, there is confusion among legal experts as to whether the requirements contradict other laws. According to Digital Today, the new requirements would contravene the existing Personal Information Protection Act, which stipulates that local companies cannot legally request social security numbers. The measure also cover financial institutions, however they can request it under exceptional circumstances, such as for major banking transactions. The Enforcement Decree of the Special Payment Act is expected to come into force in March 2021 and will require "virtual asset services providers" …

Leaked documents from the U.S. Financial Crimes Enforcement Network (FinCEN) imply that the agency’s revamped efforts to identify illicit transactions and money laundering may not be sufficient. But on this occasion, the institutions described as being at fault are not crypto exchanges, but some of the world’s best-known banks. BuzzFeed News reported on Sept. 20 that it received thousands of documents detailing “suspicious activity reports,” or SARs, from banks to FinCEN between 2000 and 2017. According to the news outlet, the reports “offer an unprecedented view of global financial corruption, the banks enabling it, and the government agencies that watch …

The COVID-19 pandemic has forced governments worldwide to focus on bringing blockchain technology to their financial services, along with the needed regulatory upgrades to keep the burgeoning fintech industry clean. Related: Not like before: Digital currencies debut amid COVID-19 For example, on Sep. 10, Switzerland — a global center for the wealth management industry, housing around $2 trillion or 27% of global offshore wealth — passed a reformed Blockchain Act that includes a new set of laws and regulations to support the growth of blockchain and decentralized finance companies in the country. Related: Why Switzerland is becoming a “crypto nation” …

In July this year, the Office of the Comptroller of the Currency granted permission for federally chartered banks to provide custody services for cryptocurrency. While significant, the need for enterprise-grade infrastructure to securely deploy custody solutions has become crucial. Adrien Treccani, CEO of METACO — a technology partner for institutions entering the digital asset ecosystem — mentioned in a report published by Cointelegraph, PwC and CV VC that the institutional adoption of custody solutions for managing digital assets has clearly entered a new phase: “Greater regulatory clarity on digital assets in many jurisdictions, as well as adoption by large global …

The U.S. Financial Crimes Enforcement Network (FinCEN) has announced it will be changing the anti-money laundering (AML) and counter-terrorist financing (CTF) rules within the financial sector. The announcement stated that FinCen will be seeking public feedback on forthcoming regulatory proposals intended to modernize and strengthen rules governing the reporting and monitoring requirements of financial institutions. The new policies seek to address “the evolving threats of illicit finance, such as money laundering, terrorist financing and related crimes” which suggests that crypto firms and exchanges will be firmly in the sights of the coming regulatory changes. They will also impact the compliance …

Privacy coins including Monero, Dash, Grin, and Zcash pose less of a risk of money laundering than other cryptocurrencies according to a report by a global law firm. According to a new white paper released by U.S. international law firm Perkins Coie, anti-money laundering (AML) measures taken by regulatory bodies worldwide have been sufficient to address any issues caused by privacy coins, and additional oversight may not be necessary. The paper cited coins fitting within the current financial regulatory structure used by the U.S. Financial Crimes Enforcement Network (FinCEN), the New York Department of Financial Services (NYDFS), Japan’s Financial Services …

Binance’s famously light Know Your Customer requirements are being targeted by the current owners of Zaif, a Japanese cryptocurrency exchange that got hacked in 2018. Plaintiffs are claiming that its weak KYC requirements and high daily withdrawal limit facilitated the laundering of $60 million stolen from the exchange. The lawsuit was filed in the Northern District of California by representatives of Fisco cryptocurrency exchange, which acquired Zaif soon after the hack. Fisco is accusing Binance of helping launder $9 million in cryptocurrency, and is seeking compensation for these alleged losses. The plaintiffs maintain that Binance had the power to identify …

With the exposure of traditional banks and financial institutions to crypto-assets and all the risks involved, as well as the continued advice from governmental authorities to banks to integrate a crypto risk management system, what are the solutions available? In order to align with current regulatory standards, banks and financial institutions entering the digital asset space, whether as direct or indirect service providers, must comply with Anti-Money Laundering and Know Your Transaction, or KYT, compliance — as part of broader Know Your Customer processes. To do so, they need to be able to effectively monitor the risks associated with blockchain …

A new report by the Financial Action Task Force, or FATF, details a series of red flags that can help identify illicit activity involving cryptocurrencies. Among them are a general set of guidelines involving exchanges in jurisdictions with weaker regulations, where Binance is seemingly singled out for often moving to avoid stronger regulatory oversight. The report, published on Sept. 14, lists a variety of red flags for spotting money laundering or terrorism financing, grouped by categories. Most red flags cited are commonly seen in traditional finance as well: young or old people suddenly transacting for huge sums of value, or …

Blockchain company AnChain.AI and decentralized finance and technology provider Bluehelix plan to launch solutions addressing compliance within blockchain networks. According to reports, the two companies will roll out its Blockchain Ecosystem Intelligence, or BEI, risk engine solution. BEI is based on an API and will offer comprehensive real-time, preventive blockchain intelligence. AnChain.AI said BEI looks over 100 million crypto address and smart contracts and sifts through this using a machine learning model. It will find the best compliance structure to meet anti-money laundering (AML) when determining the source and destination of the funds. Bluehelix’s cloud platform delivers these results to …

Financial institutions worldwide have reported 134,500 suspicious transactions concerning virtual currencies in the past two years — but that’s just the tip of the iceberg according to a report published by blockchain forensics firm CipherTrace. The report says the Financial Crimes Enforcement Network (FinCEN) has seen a major increase in suspicious transaction reports from institutions since publishing its May 2019 Advisory on Illicit Activity Involving Convertible Virtual Currency (CVC). Despite this, CipherTrace asserts that many financial institutions have developed inadequate “home-grown” systems for identifying cryptocurrency-related accounts and transactions, that simply use lists of the names of crypto exchanges and virtual …

Dr. Elias Strehle of the Blockchain Research Lab and Lennar Ante of the University of Hamburg recently warned that blockchain nodes engaging in exclusive mining “have no incentive to forward new transactions to their peers.” They speculated that crypto miners may instead be incentivized to keep transactions confidential “in the hope of being the only one who can earn the associated transaction fees.” Exclusive mining, which is a type of collusion between a transaction initiator and a single miner or pool, uses private channels to confirm transactions rather than broadcasting them on the public blockchain. It is only after they …