With just months left before South Korea’s new Know-Your-Customer (KYC) regulations come into place, the country’s legal minds have yet to figure out what it will mean for its privacy protection laws. The new KYC laws will affect financial service providers, including crypto exchanges, and will require the use of social security numbers, which contravenes privacy laws. The new KYC laws date back to January 2018 when the government banned anonymous digital currency trading.
KYC requirements for financial services companies have become more strict.
Since January 2018, the government has continually stepped up its KYC requirements for financial services companies. These new requirements come into effect in March next year. However, their implication on privacy laws has been the subject of heated debate among South Korean legal experts. The new laws will require crypto exchanges and Bitcoin wallets to verify the details of their users against their personal data. This data will include their social security numbers as well. In South Korea, a law known as the Personal Information Protection Act prohibits local firms from legally requesting their customers for their social security numbers.
South Korea leads in enforcing crypto regulations.
South Korea is among the few countries that have enforced proper crypto regulations. The privacy law lays out special circumstances under which a financial institution may request these numbers, such as when the customer is making a major transaction. Citing a local financial analysis institute, the local outlet Digital Today claimed that collecting social security numbers is the most effective means of preventing money laundering by the exchanges. However, due to the privacy protection law, there’s still a long way to go before the South Korean government can find an amicable solution that stamps out crime while still protecting privacy.
