The Korea Financial Intelligence Unit (FIU) issued an institutional warning and imposed 2.73 billion won in fines on virtual asset service provider Korbit for violating anti-money laundering obligations under the Act on Reporting and Using Specified Financial Transaction Information. The chief executive was cautioned, and the reporting officer and other employees were also disciplined, including a reprimand.
The FIU convened a sanctions review committee on the 31st and made this decision regarding Korbit. The FIU conducted a comprehensive anti-money laundering inspection of Korbit from Oct. 16 to Oct. 29 last year. As a result of the inspection, the FIU said it confirmed violations of obligations under the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Transaction Information Act), including the ban on transactions with unreported virtual asset service providers, customer due diligence obligations, and transaction restriction obligations.
According to the FIU, Korbit violated customer due diligence and transaction restriction obligations under the Special Financial Transaction Information Act in about 22,000 cases. Under the act, virtual asset service providers must restrict transactions for customers whose customer due diligence has not been fully completed.
In Korbit's case, it treated customers whose identity information could not be verified or whose detailed addresses were improperly entered as having completed customer due diligence and allowed transactions. Even when the cycle for reperforming customer due diligence came due, it did not perform customer due diligence within the reperformance period, and when it did, it did not recheck an ID with real-name verification.
It allowed transactions without additional customer due diligence for customers whose risk ratings were raised due to concerns about money laundering based on the customers' money laundering risk assessments.
Korbit was also found to have violated the obligation to ban transactions with unreported virtual asset service providers by supporting a total of 19 virtual asset transfer transactions with three overseas unreported virtual asset service providers that did not fulfill reporting obligations under the Special Financial Transaction Information Act.
A total of 655 cases were also detected in which it violated the statutory risk assessment obligation by failing to conduct a money laundering risk assessment prior to supporting new transactions. The FIU said, "We will issue prior notice of fines and, after providing at least 10 days to submit opinions, finalize the amount of fines after considering the opinions submitted."