Upbit faces business suspension and fines over anti-money laundering violations

0 1,988 1 minute read

Key Takeaways

Upbit is facing potential suspension and fines due to AML and KYC violations.
The Financial Intelligence Unit found 700,000 KYC procedure failures at Upbit.

Upbit, which dominates South Korea’s crypto trading market, faces potential business suspension and fines due to violations of anti-money laundering (AML) regulations, particularly regarding its Know Your Customer (KYC) practices, Maeil Business Newspaper reported on Jan. 16.

On January 9, the Financial Intelligence Unit (FIU) of South Korea’s Financial Services Commission, overseeing anti-money laundering (AML) and counter-terrorism financing (CFT) compliance, issued a preliminary notice of sanctions targeting Upbit.

The sanctions could restrict the exchange from onboarding new customers for up to six months, while permitting existing users to continue trading. Currently South Korea’s largest crypto exchange, Upbit handles over 70% of the country’s digital asset trading volume.

The action follows an investigation that uncovered approximately 700,000 cases where Upbit failed to properly implement KYC procedures. Under the Specific Financial Transaction Information Act, violations can incur fines of up to 100 million won per case, Maeil stated.

The FIU also accused Upbit of conducting transactions with unregistered overseas crypto businesses, which violated local regulations.

In response to this claim, an Upbit representative stated “it was difficult to determine in advance whether it was an unreported overseas exchange on the blockchain.”

Upbit has until Jan. 20 to respond to the allegations. The FIU is set to hold a meeting on Jan. 21 to finalize sanctions, which could include a temporary shutdown of their business.

The sanctions could affect Upbit’s business license renewal, which has been under review since its expiration in October 2024.