Coinone Faces $3.5M AML Fine and Temporary Business Restrictions

TLDR

• South Korean regulators fined Coinone about $3.5 million for AML failures.
• Authorities suspended selected Coinone services until corrective steps are verified.
• Regulators said Coinone failed to detect and report suspicious transactions properly.
• The review found gaps in due diligence, monitoring, documentation, and staff training.
• Coinone can still serve existing users under certain conditions during the corrective period.

South Korean regulators fined Coinone about $3.5 million and suspended parts of its business over anti-money-laundering failures. The action followed months of inspections into the exchange’s controls, onboarding checks, transaction reviews, and reporting practices. For now, Coinone can keep serving existing users, but authorities have restricted selected services until remedial steps are verified.

Regulators Detail Coinone’s AML Control Failures

Officials said Coinone failed to build and maintain systems that could detect and report suspicious activity properly. They said the exchange treated AML work as “a formality” as trading and user numbers rose.

The review covered customer onboarding, transaction monitoring, and reports sent to Korea’s Financial Intelligence Unit. Regulators said those procedures fell short of standards under the Act on Reporting and Using Specified Financial Transaction Information.

Authorities also said Coinone failed to identify higher-risk accounts during customer due diligence checks. Some users deposited and traded large sums without full checks on occupation, income, or ties to sanctioned regions.

Regulators said Coinone missed transactions with common warning signs, including repeated transfers to known high-risk wallets. They also cited rapid in-and-out movements and patterns that resembled mixing activity on certain accounts.

In some cases, the exchange lets accounts keep trading before compliance staff finishes reviewing internal alerts. Regulators said that the practice weakened the platform’s response to suspicious activity and reduced control over risk.

Officials also criticized weak ongoing monitoring as user behavior changed after accounts were opened. They said Coinone did not update risk profiles fast enough when trading patterns shifted.

The findings also cited poor documentation and limited staff training across compliance functions. Regulators said those gaps made it harder to prove that AML decisions followed one standard.

Business Restrictions Stay Until Corrective Steps Are Verified

As part of the sanction, authorities suspended selected Coinone services for a set period. The limits can cover new account openings, some fiat services, or products that carry higher AML risk.

Coinone can continue basic services for current users, but it must follow conditions during the corrective process. Those conditions can include outside audits, frequent reports, and proof that new monitoring tools are working.

Regulators said the suspension will stay in place until Coinone confirms and documents its repairs. The order also narrowed the exchange’s ability to accept new customers during that period.

The case followed months of inspections by Korean authorities. Inspections reviewed onboarding checks, monitoring controls, and FIU reporting. Regulators acted under Korea’s specified financial transactions reporting law. Coinone must prove AML tools still work before limits end.

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