South Korea’s government is set to enforce new reporting standards for cryptocurrency firms operating in the country.
According to a report from local publication Korea JoongAng Daily, businesses that deal with cryptocurrencies will have to report financial transactions to the government as well as adhere to strict anti-money laundering requirements.
The South Korean Financial Services Commission has announced that amendments will be made to the Reporting and Using Specified Financial Transaction Information Act which will come into effect on March 25.
Five year jail time, fines for failure
The amendments to the existing act carry some serious implications for companies that fail to abide by new requirements. Businesses that deal with the exchange, custody and management of cryptocurrencies will have to report to the Korea Financial Intelligence Unit (FIU), which oversees the implementation of AML practices in the country.
Individuals that are looking to open new businesses that will operate in the cryptocurrency space will have to report to the FIU while crypto businesses already operating have six months to report to the body.
The new reporting rules have some serious teeth as well, as businesses and their responsible individuals that fail to report to the FIU could face up to five years in prison as well as fines of up to 50 million won ($44,200).
Businesses will have to ensure that all users are properly identified in line with Know-Your-Customer regulations as well as report any suspicious transactions to authorities.
Authorities seize funds from tax evaders
South Korea’s tax authorities have already proved that they will take action against individuals that do not abide by its laws. Earlier this week 2400 individuals had been caught using cryptocurrencies to avoid paying tax.
The National Tax Service revealed that 2,416 tax evaders had accumulated $32mln in cryptocurrencies, including BTC and ETH. The crackdown picked out individuals that had made profits over $10M while evading tax, and the NTS recovered all the hidden assets in cash and bonds.
Tax laws in the country had also been amended in January 2020 and will see individuals earning more than 2.5 million won ($2,300) a year from cryptocurrency trading will be taxed at a rate of 20%. These taxes are only due to begin being collected in 2023.