South Korean Lawmakers Propose Expanding FIU Powers to Investigate Unregistered Crypto Firms
Key Takeaways
- •People Power Party lawmaker Eom Tae-young and nine other legislators filed a bill on Thursday to amend the Act on Reporting and Using Specified Financial Transaction Information, the AML statute governing virtual asset service providers in South Korea.
- •The proposal would allow anyone to report suspected violations directly to the FIU, which could then investigate and analyze cases, file complaints, request criminal investigations, or share information with investigators.
- •Police suspended investigations or preliminary inquiries into 23 of the 25 unregistered virtual asset service providers referred by the FIU between August 2022 and August 2025, with the companies and individuals involved reportedly based overseas.
- •As of June, 28 virtual asset service providers were registered with the FIU, and the regulator had referred 40 suspected illegal operators to investigative authorities.
- •The bill remains at the introduction stage and must pass the National Assembly, arriving amid broader tightening that includes the Virtual Asset User Protection Act, in force since July 2024, and a lowered travel-rule threshold for crypto transfers.
A group of South Korean lawmakers has moved to strengthen enforcement against unregistered crypto businesses, introducing legislation that would expand the Financial Intelligence Unit's (FIU) authority to investigate firms operating outside the regulatory perimeter.
On Thursday, People Power Party lawmaker Eom Tae-young, together with nine other legislators, filed the bill, which proposes adding a new provision to the Act on Reporting and Using Specified Financial Transaction Information (bill) — the anti-money-laundering statute that governs virtual asset service providers (VASPs) in South Korea.
Under the proposal, anyone could report suspected violations of the law directly to the FIU. With the new provision in place, the agency could investigate and analyze alleged violations, file complaints with the relevant authorities, request criminal investigations, or provide information to investigators.
The bill remains at the introduction stage and must pass the National Assembly before it can amend the existing law.
The FIU, which operates under the Financial Services Commission (FSC), serves as South Korea's financial intelligence agency for anti-money-laundering supervision and reporting. Under the current framework, the FIU identifies suspected unregistered operators but relies on police and other authorities to pursue investigations.
That division of labor has produced limited results. Police suspended investigations or preliminary inquiries into 23 of the 25 unregistered virtual asset service providers referred by the FIU between August 2022 and August 2025, according to Yonhap. The companies and related individuals were reportedly based overseas, placing them beyond the reach of domestic enforcement.
Crypto companies serving South Korean customers must register with the FIU under the reporting law, which was amended in March 2021 to bring virtual asset businesses within the country's anti-money-laundering regime. The regulator said in June that 28 providers were registered and that it had referred 40 suspected illegal operators to investigative authorities.
The proposal sits within a broader tightening of South Korea's crypto rules, in a market where retail trading activity ranks among the world's heaviest. The Virtual Asset User Protection Act took effect in July 2024, placing virtual asset business operators under FSC supervision with user-protection requirements, and the travel-rule threshold for crypto transfers has since been lowered.
Related: South Korea drops Travel Rule threshold for crypto transfers
