Virtual Asset Service Providers Including Cryptocurrency Exchanges, Obliged to Conduct Customer Verification and Suspicious Transaction Reporting

Mandatory Anti-Money Laundering Obligations Starting from the 25th of This Month

(Photo by Getty Images Bank)

[Asia Economy Reporter Kwangho Lee] From the 25th of this month, virtual asset service providers, including cryptocurrency exchanges, will be subject to anti-money laundering obligations.

The Financial Services Commission announced on the 16th that the amendment to the "Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information" was approved at the Cabinet meeting.

To operate a virtual asset business, prior notification to the Financial Intelligence Unit (FIU) is required. Existing businesses must complete their notification within six months from the date the amendment takes effect.

If existing businesses fail to submit their notification by September 24 or continue operations without approval of their notification, they will be considered unregistered operators and face imprisonment of up to five years or a fine of up to 50 million KRW.

The anti-money laundering obligations imposed on virtual asset service providers include customer identification and suspicious transaction reporting.

However, since it may be difficult to fulfill customer identification and suspicious transaction reporting obligations before notification approval, existing virtual asset businesses may comply with anti-money laundering obligations starting from the approval of their notification.

Additionally, inspections and supervision related to the obligation to provide information during virtual asset transfers will be implemented from March 25 next year (one-year grace period from the enforcement date of the law). This is because some time is needed to establish an information-sharing system among virtual asset service providers.

A Financial Services Commission official stated, "Some existing businesses may close without submitting notifications," and advised, "Customers should verify the notification status and business continuity of existing operators as much as possible to avoid damages when trading virtual assets."

If virtual asset service providers use or provide personal information such as resident registration numbers collected for purposes other than intended, they will be subject to imprisonment of up to five years or a fine of up to 50 million KRW under the Personal Information Protection Act.

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