Financial Services Commission Notifies 27 Domestic-Focused Foreign Virtual Asset Exchanges of Reporting Requirements

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] The Financial Services Commission announced on the 22nd that it has notified 27 foreign virtual asset service providers (VASPs) deemed to be conducting business targeting domestic residents to report under the Act on Reporting and Using Specified Financial Transaction Information (the Specified Financial Information Act) by September 24, and warned that continued operation in violation of this will result in penalties.

The Specified Financial Information Act, which will be enforced from September 25, imposes a reporting obligation on virtual asset service providers and applies even when activities conducted abroad affect the domestic market. Accordingly, foreign VASPs conducting business targeting domestic residents must report to the Financial Intelligence Unit (FIU), and fulfill obligations under this law related to business targeting domestic residents.

Domestic-targeted VASPs were selected based on factors such as whether they support Korean language services, whether they conduct marketing and promotion targeting domestic residents, and whether they support transactions or payments in Korean won.

The Financial Services Commission emphasized, "Even VASPs not notified this time but conducting business targeting domestic residents are subject to reporting and must report to the FIU. If they do not report, they must cease business targeting domestic residents after September 25," adding, "Continued operation may result in imprisonment for up to five years or fines up to 50 million KRW under the Specified Financial Information Act."

The FIU plans to notify foreign VASPs that continue operations without reporting after September 25 of their violations, and take measures such as blocking access to their websites to prevent illegal operations. It also plans to report to investigative agencies such as prosecutors and police, and actively pursue cooperation with foreign FIUs and international criminal justice cooperation to punish illegal operators.

Meanwhile, as of the day before, no foreign VASPs have been confirmed to have obtained the ISMS certification, which is one of the reporting requirements.

A Financial Services Commission official stated, "If foreign VASPs operate without reporting after September 25, it will be considered illegal business, so users should be cautious to avoid damages from using illegal operators," adding, "users may not be able to smoothly withdraw their own funds or virtual assets, so to prevent damage, it is necessary to take measures such as promptly withdrawing their own virtual assets if needed."

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