SKorea financial authorities inspecting six local banks over virtual currency to clients

European Commission President Jean-Claude Juncker delivers a speech at a conference on the EU's next long-term budget after Brexit in Brussels, Belgium, January 8, 2018. REUTERS/Francois Lenoir

Vastavam web: South Korean financial authorities on Monday said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets 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.

Choi said the inspections are intended to provide guidance to banks and are not the result of any suspected wrongdoing.“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.NH Bank and Shinhan Bank representatives declined to comment, while the other three banks could not immediately be reached for comment.

Choi said authorities 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.Bitcoin and other virtual coins have been extremely popular in South Korea, drawing wide investments from housewives and students. Government officials have expressed concern over frenzied speculation, with South Korea’s central bank chief warning of “irrational exuberance” in trading of virtual currency last month.

South Korea’s virtual currency exchanges have been more vulnerable to hackers as bitcoin trades at higher rates on local exchanges than they do elsewhere. As of 0710 GMT, bitcoin’s global price average was trading at $16,294 while in South Korean markets, it stood at 25 million won, or $23,467.35, according to Korea’s bitcoin prices are higher because of the extreme popularity of the virtual currency in the country, with buyers greatly outnumbering those willing to sell, said Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities.

The fact that some of the most active virtual currency exchanges in the world are in South Korea also makes the country an attractive target for hackers, he added.