South Korea’s Financial Intelligence Unit said it has imposed sanctions on local cryptocurrency exchange Korbit, citing widespread violations of the country’s anti money laundering rules. The decision was finalized on Dec. 31, following a sanctions review committee meeting, according to the FIU.
The regulator issued an institutional warning to Korbit and ordered an administrative fine of ₩2.73 billion under the Specified Financial Transaction Information Act. In addition, the FIU imposed personal sanctions, issuing a caution to Korbit’s chief executive and a reprimand to the exchange’s reporting officer responsible for compliance.
The FIU said the sanctions followed a review of Korbit’s internal controls and corrective measures. While the exchange presented its position during the review process, the regulator concluded that multiple violations were confirmed and required formal penalties.
FIU Flags Thousands of Due Diligence Failures
The FIU said its on site inspection, conducted from Oct. 16 to Oct. 29, 2024, uncovered roughly 22,000 cases involving failures in customer due diligence and transaction restrictions. These cases included unclear or missing identity documents, incomplete address information, and instances where outdated documents were used for re verification.
In several cases, customers were allowed to continue trading even though identity checks had not been fully completed, the FIU said. The regulator described these lapses as breaches of core AML obligations designed to prevent illicit financial activity through virtual asset platforms.
The inspection also identified 655 cases in which Korbit failed to conduct required money laundering risk assessments before supporting new transactions. The FIU said some of these cases involved activity linked to non fungible tokens, which still require the same risk review standards under Korean rules.
Unreported Overseas VASP Transactions Trigger Action
In addition, the FIU said Korbit supported 19 virtual asset transfer transactions involving three overseas virtual asset service providers that had not completed South Korea’s mandatory reporting process. The regulator said this violated the explicit ban on transactions with unreported VASPs.
The FIU said these findings showed weaknesses in Korbit’s monitoring systems for cross border transactions. As a result, the agency decided stronger enforcement was necessary to reinforce compliance expectations across the market.
The FIU added that detailed sanctions information will be posted publicly after the fine completes a prior notice and opinion submission process. The case adds to a series of enforcement actions aimed at tightening oversight of South Korea’s digital asset sector.
Source: https://coinpaper.com/13474/south-korea-fiu-slaps-korbit-with-2-73-b-fine-over-aml-breaches
