The ‘withdrawal delay’ system at virtual-asset exchanges will be strengthened to prevent voice-phishing losses.

The Financial Services Commission said on the 8th, “We have overhauled the withdrawal-delay exception criteria that had been operated independently by each virtual-asset exchange and prepared a unified standard regulation reflecting the strengthened withdrawal-delay exception criteria.”

In May last year, the Financial Services Commission, together with virtual-asset exchanges, implemented the ‘virtual-asset withdrawal-delay system’.

This system limits, for a set period, the withdrawal of virtual assets purchased by new users, in order to prevent voice-phishing proceeds from being converted into virtual assets and siphoned off through accounts linked to virtual-asset exchanges.

However, a recent review found that exchanges were allowing exceptions to the withdrawal delay based on differing in-house standards, and that the minimum criteria for applying such exceptions were unclear.

As a result, when the exception criteria were easy to meet, voice-phishing criminals were able to withdraw criminal proceeds immediately.

In fact, among 2526 cases of fraudulent user accounts at the five major exchanges during June~September last year, 1490 cases, about 59%, occurred in accounts subject to withdrawal-delay exceptions.

The financial authorities revised the exception criteria, which had differed by exchange, and prepared a unified standard regulation. The improvements require mandatory consideration of the number of virtual-asset transactions, the trading period, and deposit/withdrawal amounts, and also require that specific non-eligibility conditions for exceptions be stipulated. Previously, exchanges had applied differing criteria such as number of trading days, member history, number of deposits/withdrawals, transaction amounts, and histories of financial incidents.

A simulation applying this unified standard regulation found that, as of the end of last year, the number of customers eligible for withdrawal-delay exceptions would drop to 1% or less of the previous level.

In addition, for customers to whom withdrawal-delay exceptions are applied, the authorities will conduct enhanced customer verification procedures, such as confirming sources of funds, periodically at least once a year, and will establish a monitoring system to manage such customers by analyzing virtual-asset withdrawal information.

The Financial Services Commission said, “We will regularly re-examine the adequacy of the criteria and address any shortcomings,” and added, “When immediate withdrawals are needed for reasons unrelated to voice phishing, such as settlement, we will allow exceptions to the withdrawal delay to minimize consumer inconvenience.”