Hwaum Law Office has entered into a strategic partnership with Merkle Science, a global provider of anti-money laundering (AML) solutions for the cryptocurrency and virtual asset industry.
Merkle Science provides AML solutions for cryptocurrencies through its KYT (Know Your Transaction) On-Chain Monitoring Platform, which enables monitoring and analysis of blockchain transactions.
Merkle Science has attracted institutional investment from prominent venture capital firms and investors, including SGInnovate, a venture capital firm affiliated with the Singapore government; LuneX, the crypto-focused arm of Golden Gate Ventures; and Digital Currency Group (DCG). Headquartered in Singapore, Merkle Science has developed its AML solutions based on regulatory frameworks and standards including the Payment Services Act, AML regulations, and recommendations issued by the Financial Action Task Force (FATF).
In Korea, the Act on Reporting and Using Specified Financial Transaction Information (the “Specified Financial Transaction Information Act”) was amended on March 25, 2020, with the amendments taking effect on March 25, 2021. The amended Act introduced requirements for virtual asset service providers (VASPs) to fulfill certain obligations designed to prevent money laundering and other illicit activities involving virtual asset transactions.
Under the amended Act, VASPs are required to report information such as their business name, representative’s name, and business address to the Commissioner of the Korea Financial Intelligence Unit (KoFIU). The Act also introduced requirements relating to the acquisition of Information Security Management System (ISMS) certification, as well as other regulatory obligations.
In addition, VASPs are required to take measures such as separately managing transaction records by customer in order to fulfill reporting obligations concerning transactions suspected of involving illicit property and high-value cash transactions.
Among these requirements, the reporting obligation under Article 7 and the AML measures required of VASPs under Article 8 have become essential compliance requirements. Compliance with these obligations is therefore an important factor for the continued operation of existing virtual asset businesses and represents a significant regulatory threshold for new market entrants.
Merkle Science’s AML solutions are expected to provide substantial support to VASPs seeking to comply with the reporting and AML obligations introduced under the amended Specified Financial Transaction Information Act.
Through our collaboration with Merkle Science, Hwaeum Law Office will continue to support virtual asset businesses in complying with applicable legal and regulatory requirements, contributing to the growth of the virtual asset industry within the regulated financial system while promoting customer protection.
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