"Blocking Voice Phishing"... Financial Authorities Tighten Exception Criteria for Withdrawal Delays at Crypto Exchanges

The exception criteria for withdrawal delays at virtual asset exchanges will be strengthened. The government will standardize the exception criteria that currently differ by exchange, in order to prevent accounts at certain exchanges—where criteria are easily met—from being exploited for voice phishing crimes.

On April 8, the Financial Services Commission announced that it has revised the "virtual asset withdrawal delay system" in cooperation with the Financial Supervisory Service, the Digital Asset Exchange Alliance (DAXA), and virtual asset exchanges, to minimize the outflow of funds from voice phishing victims’ accounts via virtual asset accounts.

Although the virtual asset withdrawal delay system has been in place since May last year, each exchange had its own standards for allowing exceptions to withdrawal delays, resulting in inconsistent criteria. As a result, if exceptions could be easily satisfied based on factors such as customer membership duration or trading history, voice phishing criminals could immediately withdraw their illicit proceeds. From June to September last year, 59% of scam-related accounts (1,492 out of 2,526 cases) detected at virtual asset exchanges were those classified as exceptions to the withdrawal delay system.

Going forward, the withdrawal delay exception criteria will be unified across all exchanges. Previously, one exchange might assess trading days and membership history, while another only considered the number of deposits and withdrawals. Now, all exchanges will uniformly apply criteria based on trading frequency, trading period, deposit and withdrawal amounts, and other factors. According to a simulation based on these new criteria, by the end of last year, the number of customers qualifying for withdrawal delay exceptions had decreased to within 1% of the previous total.

Monitoring of customers who qualify for withdrawal delay exceptions will also be strengthened. Customer due diligence procedures, such as verifying the source of funds, will be conducted at least once a year for these customers, and information related to virtual asset withdrawals will be collected and analyzed.

An official from the Financial Services Commission stated, "We will review the effectiveness of the strengthened withdrawal delay system in reducing voice phishing damage and reevaluate the adequacy of the criteria to prevent voice phishing funds from being withdrawn by circumventing the exceptions. We also plan to minimize inconvenience by allowing immediate withdrawals as exceptions in cases unrelated to voice phishing."

This content was produced with the assistance of AI translation services.