Bithumb Fined for AML Violations
Bithumb, a prominent cryptocurrency exchange operating in South Korea, has been penalized with a hefty fine totaling 36.8 billion won (approximately $24.5 million) for breaching the nation’s Anti-Money Laundering (AML) regulations. This action follows an extensive review conducted by the Financial Intelligence Unit (FIU), part of the Financial Services Commission, which discovered an alarming 6.65 million violations during an inspection of the exchange’s practices.
Key Failures Identified
Key failures identified by the regulators included Bithumb’s:
- Inadequate customer identity checks
- Insufficient transaction monitoring
- Poor record-keeping
These significant lapses violate the country’s stringent AML rules. Furthermore, the exchange was found to have facilitated nearly 46,000 transactions involving 18 virtual asset service providers (VASPs) that were not registered under South Korean law.
Consequences of the Fine
The decision to impose this fine came after a sanctions committee held discussions on Bithumb’s compliance with the Act on Reporting and Use of Specific Financial Transaction Information. As a result of these infractions, new customers at Bithumb will face a six-month suspension on external cryptocurrency transfers from March 27 to September 26, although existing clients will still be permitted to engage in trading and external transactions. New users, however, can continue to buy, sell, and convert Korean won on the platform.
Regulatory Landscape
This enforcement action follows repeated alerts from the FIU, which had advised Bithumb to cease all dealings with the unregistered overseas firms yet found its guidance unheeded. The current sanction also marks a significant moment in South Korea’s regulatory landscape, as it represents the largest fine ever levied against a domestic crypto exchange for AML infractions.
Previous Fines and Scrutiny
In a similar vein, the FIU had previously imposed a fine of 35.2 billion won on Upbit, another major player in the South Korean crypto market, accompanied by a three-month suspension on crypto operations for new users.
Additionally, Bithumb is under scrutiny from the Financial Supervisory Service (FSS) concerning a separate incident where an operational error led to the accidental distribution of 620,000 Bitcoin, valued at around $40 to $44 billion at the time. The mistake, which arose from an employee misentering payout amounts in Bitcoin instead of Korean won during a promotional event, has drawn critical attention to the platform’s internal controls and electronic ledger management.
