With the South Korean government preparing to implement know-your-customer (KYC) and anti-money laundering (AML) compliance processes, there is confusion among legal experts as to whether the requirements contradict other laws.
According to Digital Today, the new requirements would contravene the existing Personal Information Protection Act, which stipulates that local companies cannot legally request social security numbers.
The measure also cover financial institutions, however they can request it under exceptional circumstances, such as for major banking transactions.
The Enforcement Decree of the Special Payment Act is expected to come into force in March 2021 and will require "virtual asset services providers" to confirm the real names of customers by verifying them against personal data such as social security numbers.
One special note made by the Financial Information Analysis Institute addressed the current situation of the ambiguity in the upcoming AML-KYC bill on crypto exchanges. It argued that because an exchange is hosted purely on the internet it is not just a financial institution but is more like a “mail-order seller like an internet shopping mall.”
“It does not mean that virtual asset operators are given the status of financial business operators or incorporated into institutional financial companies through the enforcement of the revised special money law."
Local legal experts specializing in the crypto industry stated that due to the ambiguity of the upcoming new AML-KYC compliance measures, "there is still a long way to go, even if such content is included in the Virtual Asset Business Rights Act."
The crypto bill, to be implemented in March next year as well, calls for existing crypto exchanges to meet requirements for a real-name account and ISMS authentication and report their operations within six months after the law's implementation.
However, legal experts believe that the issue should be discussed as soon as possible by clarifying the status of the crypto exchanges within the upcoming AML-KYC new measures and if legal exemptions could be applied to the crypto exchanges in terms of asking for social security numbers.