South Korea Fines Crypto Exchange Korbit $1.9M for Violations of AML Regulations

South Korea’s Financial Intelligence Unit (FIU) has issued a significant warning and imposed fines totaling ₩27.3 billion (approximately $1.89 million) on the cryptocurrency exchange Korbit, citing numerous violations of anti-money laundering (AML) regulations in the country.

Key Takeaways

The FIU fined Korbit ₩27.3 billion ($1.89 million) due to extensive AML violations.
Infractions included around 22,000 breaches related to customer verification and transaction restrictions.
Korbit was found to have facilitated transactions with unregistered overseas virtual asset providers.
The FIU imposed additional accountability measures on Korbit's senior management.
Mirae Asset Group is in talks to acquire Korbit amidst ongoing scrutiny of the crypto industry.

South Korea

In an official statement, the FIU detailed that these violations were identified following an in-depth on-site inspection of Korbit, which took place from October 16 to October 29, 2024.

Widespread Violations of AML Regulations

The FIU reported that Korbit was responsible for roughly 22,000 breaches concerning customer due diligence and transaction-restriction mandates.

Of these breaches, over 12,800 involved shortcomings in customer identification. This included the acceptance of unclear or incomplete identity documentation, approving accounts with missing or inaccurately recorded addresses, failing to re-verify customer identities when necessary, and allowing transactions for customers whose risk ratings for money laundering had increased without further checks.

Additionally, there were about 9,100 cases where Korbit breached transaction-restriction rules by permitting trading activities for customers without completed identity verification—this directly contravenes Korean AML laws.

Unlawful Transactions With Overseas Platforms

The FIU also discovered that Korbit facilitated 19 transfers of crypto assets involving three overseas virtual asset service providers that were not registered under South Korean law. Such actions are expressly forbidden by the Specified Financial Transaction Information Act.

Moreover, the regulator highlighted 655 violations concerning Korbit’s failure to carry out necessary money-laundering risk assessments before supporting the launch of new products, including some services related to NFTs.

Measures Against Misconduct

Alongside the institutional fines, the FIU has instituted disciplinary measures against members of Korbit's senior management. The company's CEO received a formal warning while the compliance officer faced a reprimand due to their accountability in overseeing the extent and nature of the violations.

The FIU stated that the sanctions were determined following a thorough assessment of the severity of the breaches, the causes behind them, and the company's steps for rectification, along with existing legal precedents.

Further information regarding the sanctions will be made available on the FIU's website after procedural steps are finalized, including the confirmation of the fine amount and Korbit's opportunity to respond.

The FIU stressed its commitment to enforcing ongoing actions resulting from current inspections and warned that major violations of AML regulations would be met with strict consequences.

"Enhancing AML capabilities and compliance frameworks among virtual asset service providers is vital for the trust and growth of the crypto market," stated the FIU.

Potential Acquisition by Mirae Asset Group

Recently, it was revealed that Mirae Asset Group has initiated discussions to acquire the crypto exchange Korbit, as traditional financial entities increasingly engage with licensed crypto infrastructure.

These talks are reportedly happening through Mirae Asset Consulting, a non-financial arm of Mirae Asset Group, which has signed a memorandum of understanding with major shareholders of Korbit.

Korbit is predominantly owned by NXC, the holding entity for gaming giant Nexon, which holds nearly 60.5% of the exchange. Another significant shareholder, SK Planet, controls approximately 31.5%, according to local media reports.