South Korea’s financial regulator said on Monday it is jointly carrying out inspections on six local banks that offer virtual currency accounts to institutions amid growing concerns increasing use of assets like bitcoin could lead to a surge in crime.
The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) of Korea will check if banks are adhering to anti-money laundering rules and using real names for accounts, FSC Chairman Choi Jong-ku told a press conference.
Virtual currency is currently unable to function as a means of payment and it is being used for illegal purposes like money laundering, scams and fraudulent investor operations. The side effects have been severe, leading to hacking problems at the institutions that handle cryptocurrency and an unreasonable spike in speculation.
The six banks: NH Bank, Industrial Bank of Korea, Shinhan Bank, Kookmin Bank, Woori Bank and Korea Development Bank will be inspected between January 8 and 11.
Choi Jong-ku said that they are also looking at ways to reduce risks associated with cryptocurrency trading in the country, which could include shutting down institutions that use such currencies. Choi warned that authorities would crack down on virtual currency crime and dole out heavy punishments on those who partake in market price manipulation, pyramid schemes and money laundering.