Ten South Korean lawmakers have proposed a bill that would let the Financial Intelligence Unit (FIU) pursue unregistered crypto operators directly and refer them to prosecutors, a response to police having shelved nearly every case the unit has handed over to them.

Ten lawmakers file bill #2220655

The measure was introduced on Thursday by Rep. Eom Tae-young of the People Power Party and nine co-sponsors. It amends the Act on Reporting and Using Specified Financial Transaction Information by inserting a new provision, Article 15-4.

South Korea's legislative tracking portal shows the bill was referred on August 21 to the political affairs committee of the National Assembly, the body that oversees the Financial Services Commission. The legislation still faces committee review and a floor vote, its wording may change along the way, and bills filed by individual legislators often die unpassed when an Assembly term ends. Eom's People Power Party is also the smaller bloc in the 300-seat Assembly, where the Democratic Party and its allies have held a majority since the April 2024 general election, so the measure would need support beyond its sponsors' own ranks to advance.

Under the proposal, anyone could report a suspected violation directly to the FIU. The unit could then investigate the allegation, analyze it, file a complaint, request a criminal investigation, or pass the information to investigators.

The FIU sits within the Financial Services Commission (FSC) and administers the registration regime that crypto firms serving Korean customers must join. As of June, it had 28 registered providers and said it had referred 40 suspected illegal operators to investigative authorities.

Police shelved 23 of 25 FIU referrals

Between August 2022 and August 2025, the FIU referred 25 unregistered virtual asset service providers to police for investigation. Police suspended the investigations or preliminary inquiries in 23 of those cases. Most of these firms and the people behind them were said to be located overseas, making them difficult to access under the current process.

At present, the FIU can flag a suspected unregistered operator, but it must rely on police and other agencies to pursue it. Operating without registration is already a criminal offense under the same act, punishable by up to five years in prison or a fine of up to 50 million won, and the proposal addresses how such cases are pursued rather than adding new conduct to the statute. The bill's statement of reasons contends that reliance on inter-agency cooperation and formal investigation requests makes a fast response difficult, and warns that unregistered venues, which it calls "private coin exchange offices," can be used for money laundering, illegal currency exchange, and illegal overseas remittance.

The proposal arrives amid a broader overhaul of South Korea's crypto rules in one of the world's most active retail crypto markets, where the won has repeatedly ranked among the most-traded fiat currencies for digital assets. The Cabinet approved an amendment on August 11 that removes the 1 million won reporting threshold for crypto transfers, a limit in place since South Korea began enforcing the Financial Action Task Force's Travel Rule in March 2022, one of the earliest implementations of the global anti-money-laundering standard. Registration provisions became effective on August 20, and the full Travel Rule expansion will follow in February 2027, per a past Cryptopolitan report. The package also introduced a 200% debt-ratio cap on exchange operators and stricter vetting of shareholders.

Licensing activity has slowed over the same period. The FIU permitted only two new virtual asset service providers in 2025, down from four the year before, and the average time to win approval rose from 11 months to 16 months, according to previous Cryptopolitan coverage. Suspicious transaction reports in South Korea climbed to 36,684 last year, and about 90% of them were linked to illegal cross-border remittance arrangements. Korean platforms have at times quoted digital assets above overseas prices — the so-called kimchi premium — a gap that South Korean authorities have previously linked to attempts to move funds across borders for arbitrage.