The relative anonymity offered by the decentralized protocol of cryptocurrency transactions has despite its advantages, also offered a degree of security to those who engage in acts of money laundering. It is therefore welcome that four South Korean cryptocurrency exchanges are joining hands to take steps against such a possibility.
Despite some built-in checks, hackers, and criminals have been able to subvert the technology driving the cryptocurrency market and launder money for their criminal deeds. It is in light of such rising incidents that four leading South Korean cryptocurrency exchanges namely, Bithumb, Upbit, Corbit and Coinone have come together to implement an AML, or an anti-money laundering initiative which they believe, would put in place sufficient checks and balances discouraging any more cases of such acts.
Key to this AML initiated by the four exchanges is a hotline – established to share real-time information between exchanges and comparing notes on any unusual trading activities or transactions that may be associated with money laundering deeds. These may include those associated with voice phishing, pyramid schemes and other illicit trading activities that are often a front to launder money. Such a system to exchange real-time information on transactions allows exchanges to maintain a register of wallets suspected of illegal activities that can then be used to hone in on money laundering suspects in the future.
Each of these initiatives, the exchanges claim, will help foster a healthier environment for the trading of cryptocurrencies. Further, as reported by South Korea’s Yonhap News Agency, an operator for one of the exchanges said:
“They are now able to instantly check any wrongful transactions made at other exchanges and take necessary measures, such as blocking their own related accounts. The cooperative step against money laundering via cryptocurrencies is expected to boost the soundness of the industry and to better protect consumers.”
While there is no uniform standard to regulation and monitoring of suspicious activities such as money laundering in the cryptocurrency market [Most exchanges have KYC schemes for those holding wallets while some in Japan has self-regulatory guidelines and external bodies], the initiative taken by the four South Korean exchanges is a welcome step in ensuring the safety and security of crypto assets.
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