South Korea’s Financial Intelligence Unit Takes Action Against Korbit
The Financial Intelligence Unit (FIU) of South Korea has taken decisive action against the local cryptocurrency exchange Korbit, imposing a ₩2.73 billion fine due to multiple infractions of anti-money laundering (AML) regulations. This measure, formalized on December 31, stemmed from an extensive review conducted by the FIU’s sanctions committee, which determined that Korbit had committed serious violations related to financial transaction oversight.
Sanctions and Warnings
As part of the sanctions, Korbit received an institutional warning alongside the administrative penalty and further personal sanctions targeting its leadership: a caution was issued to the company’s CEO, while its compliance reporting officer faced reprimand for their roles in the lapses.
Investigation Findings
The FIU’s decision followed an investigation of Korbit’s compliance mechanisms and internal protocols, which revealed substantial shortcomings. Although the exchange defended its positions during the inquiry, the FIU concluded that numerous breaches warranted formal sanctions. An on-site examination carried out from October 16 to October 29, 2024, unearthed approximately 22,000 instances where customer due diligence and transaction restrictions were inadequately addressed. These failures included missing or unclear identity documents and instances of customers trading without complete identity verification.
Moreover, Korbit was found to have neglected mandatory money laundering risk assessments in 655 transactions, including those associated with non-fungible tokens (NFTs), which are also subject to AML review standards. The inspection further revealed that Korbit facilitated 19 transfers involving unregistered international virtual asset service providers, violating regulatory requirements designed to ensure transparency in such dealings.
Implications for Compliance
These findings highlighted significant deficiencies in Korbit’s systems for monitoring cross-border transactions, prompting the FIU to implement stricter enforcement measures to bolster compliance across South Korea’s crypto market. The agency has stated that detailed information regarding the sanctions will be made available to the public following the conclusion of a necessary notice and opinion submission process. This enforcement action is part of a broader initiative by the South Korean government to tighten oversight of its rapidly evolving digital asset industry.
