compliance/aml news roundup – Cuba to Regulate Crypto | El Salvador BTC Regulations | South Korea Crypto Supervisory Bureau

Here’s our latest roundup from the Compliance and Legal Teams here at BCB Group, providing insights into the recent news highlights in the worlds of compliance and AML, crypto-focused and beyond. If you’d like to get in touch with us about any of our products or services, just send us a note, we look forward to hearing from you. Cuban City scape.


The Cuban government has plans to regulate cryptocurrencies for payments and to recognise it as legal tender. This means that certain virtual assets will be accepted in commercial transactions, and the Cuban central bank will distribute licenses to the relevant providers. It was only in June of this year that El Salvador announced it will be the first nation state to accept Bitcoin as legal tender as of 7th September,, and Cuba has now followed suit. This move largely stems from socioeconomic turbulence caused by the US sanctions regime that has been extended by President Biden. The economic sanctions regime has had major implications on the ease of money remittance. Since 2019 remittances have been capped at $1000 per quarter per Cuban National, and all major channels for remittances have ceased. For example, for the last 20 years Western Union has operated out of over 400 locations in Cuba and now they have shut up shop. With limited access to the world economy, and with humanitarian struggles only being exacerbated by the Covid-19 pandemic, the adoption of crypto, by both the Cuban people and now the state, has increased significantly due to its financial inclusivity. According to the Central American Bank for Economic Integration (CABEI) (source), Cuba’s decision is expected to transform the money remittance landscape across Central America. The technical and regulatory frameworks that will support this shift are both still required, and it will be important that robust AML and CTF controls are implemented concurrently with cryptocurrency being accepted as a means of payment in this part of the world. Source: Cointelegraph El Salvador.


In preparation for the launch of bitcoin as legal tender in El Salvador for the first time in history, the central bank of El Salvador has issued a draft set of regulations and accompanying guidance. This will likely be the first step of many in line with the much needed ongoing cooperation between the El Salvadoran government and businesses in the space. The draft set of regulations implements the legislation passed in June of this year that formally recognises BTC as legal tender, and details the business standards that will be required. Financial institutions that offer digital wallet products and custodial services will have to apply to the central bank and their compliance procedures will be assessed. They will be expected to have appropriate risk assessments, KYC procedures and transaction monitoring systems in place as they will be the pillars of the newly formed ecosystem. The law also details that there must be a “mechanism to guarantee the linking of a digital registration to a single natural or legal person”, however the precise level of scrutiny individual customers will be subject to is still uncertain. Successful implementation of such regulation will be vital for the success of El Salvador’s pioneering acceptance of BTC as legal tender. This implementation and the challenges that may yet arise will be an interesting experiment to monitor as they are paving the way for other countries to follow in their footsteps. Source: Elliptic Blog

South Korean city scape


South Korea’s Financial Services Commission has announced the establishment of an independent cryptocurrency supervisory bureau. The bureau will be nested under the Korean Financial Intelligence Unit (KFIU), which traditionally oversees money laundering. The supervisory body’s purpose is to monitor cryptocurrency-related financial activity and prevent potential money laundering. In addition, the bureau will be responsible for decision-making on license extensions for cryptocurrency operators, as well as investigating methods of enhancing investor protection. The bureau’s establishment comes in the wake of tightening cryptocurrency regulation, initiated by the FSC, amid concerns surrounding younger Koreans’ debt blamed in part on crypto asset speculation. Exchanges must register with the KFIU before the 24th of September in order to continue operations. Registered exchanges must meet certain requirements, such as: ensuring board members and CEOs are free of criminal convictions, and providing proof of adequate levels of deposit insurance to cover losses from potential hacks. Exchanges must also partner with domestic banks to ensure that customers have real name bank accounts. So far only one exchange, Upbit, partnered with K-bank, had registeredBithumb, Coinone and Korbit appear close behind, having established similar relationships with banks.

Sources: Korea Times | The Diplomat | Coindesk KED Global

China's cityscape.


China’s crypto crackdown has created a profitable vacuum for bitcoin miners around the world, according to a recent analysis by the Financial Times. June’s ban on mining in China, which previously accounted for half of global output, dramatically reduced total mining output. Although global mining power has crept back up, it still accounts for only seventy percent of May’s output. This has created a windfall for existing mining operations outside China. In the first half of 2020, UK based mining company Argo Blockchain reported a 180 percent revenue increase, a trend echoed across the pond: Canada-based Hut 8 Mining saw a 241 percent increase in mining revenue from the previous year. China’s ban initially pushed local miners into neighbouring countries, such as Kazakhstan. However, uncertainty surrounding local regulation and equipment transportation slowed efforts to relocate. Concerns surrounding crypto’s sustainability have further shaped the location of mining operations, prompting an increase in mining in countries with substantial renewable energy, such as Norway and Canada – the latter of which saw the movement of one million rigs from China in preparation for the anticipated ban. Improved infrastructure and clearer regulation has supported this boom, with public power utilities in Canada establishing five-year fixed rate agreements with mining operators.

Sources: Bitcoin Magazine | Forbes The Financial Times

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