S.Korea inspects 6 banks over clients' virtual currency accounts (updated)

Industrial Bank Of Korea

08/01/2018 06:15

* Officials checking for trading violations 
    * Regulators looking to cryptocurrency trade risks 
 
 (Adds more comments, background) 
    By Christine Kim and Dahee Kim 
    SEOUL, Jan 8 (Reuters) - South Korea's financial regulator 
said on Monday it is jointly carrying out inspections on six 
local banks that offer virtual currency accounts to institutions 
amid growing concerns increasing use of assets like bitcoin 
could lead to a surge in crime. 
    The joint inspection by the Financial Services Commission 
(FSC) and Financial Supervisory Service (FSS) will check if 
banks are adhering to anti-money laundering rules and using real 
names for accounts, FSC Chairman Choi Jong-ku told a press 
conference. 
    "Virtual currency is currently unable to function as a means 
of payment and it is being used for illegal purposes like money 
laundering, scams and fraudulent investor operations," said 
Choi. 
    "The side effects have been severe, leading to hacking 
problems at the institutions that handle cryptocurrency and an 
unreasonable spike in speculation." 
    The six banks named by the regulator are NH Bank, Industrial 
Bank of Korea  024110.KS , Shinhan Bank  SHINBC.UL , Kookmin 
Bank  KOOKM.UL , Woori Bank  000030.KS  and Korea Development 
Bank  KDB.UL . NH Bank and Shinhan Bank representatives declined 
to comment, while the other banks could not immediately be 
reached for comment. 
    Officials are also looking at ways to reduce risks 
associated with cryptocurrency trading in the country, which 
could include shutting down institutions that use such 
currencies, he said. 
    Bitcoin  BTC=BTSP  and other virtual coins have been 
extremely popular in South Korea, drawing wide investments from 
housewives and students. Government officials have broadly 
expressed concern over frenzied speculation, with South Korea's 
central bank chief warning of "irrational exuberance" in trading 
of virtual currency last month.  urn:newsml:reuters.com:*:nL4N1OK43B 
    A South Korean cryptocurrency exchange, Youbit, shut down 
and filed for bankruptcy in December after it was hacked twice 
last year, highlighting security and regulatory concerns.  
    The world's biggest and best-known cryptocurrency, bitcoin, 
stood at $15,994 as of 0551 GMT. 
    Choi warned on Monday authorities would crack down on 
virtual currency crime and dole out heavy punishments on those 
who partake in market price manipulation, pyramid schemes and 
money laundering. 
    "No one knows what is going on at these places that handle 
cryptocurrency because there is no direct regulation system in 
place regarding these institutions," Choi said. 
 
 (Reporting by Christine Kim and Dahee Kim; Editing by Sam 
Holmes) 
 ((Dahee.Kim@thomsonreuters.com; +82 2 3704 5643; Reuters 
Messaging: dahee.kim@thomsonreuters.com)) 
 
Keywords: SOUTHKOREA BITCOIN/