Financial Services Commission: All 25 Virtual Asset Operators Inadequately Prepared for the Special Act on Reporting and Using Specified Financial Transaction Information

[Asia Economy Reporter Park Jihwan] It has been revealed that none of the 25 virtual asset service providers (VASPs) subject to on-site consulting by financial authorities fully meet the registration acceptance requirements.

According to the results of the on-site consulting for virtual asset service providers jointly announced by related ministries on the 16th, all 25 VASPs failed to meet the registration acceptance requirements, and preparations for compliance with the Act on Reporting and Using Specified Financial Transaction Information (the Specific Financial Information Act) were generally insufficient. The Financial Services Commission (FSC) conducted on-site consulting for a total of 25 VASPs from June 15 to July 16.

Among the 25 VASPs, 19 companies met some registration requirements such as Information Security Management System (ISMS) certification. However, only four companies were found to be operating real-name verified deposit and withdrawal accounts. Even for the four VASPs operating real-name verified deposit and withdrawal accounts, bank evaluations are currently ongoing, and registration procedures will proceed based on the results.

Banks are conducting evaluations reflecting the 'Virtual Asset Service Provider Money Laundering Risk Assessment Plan' research, assessing legally mandatory requirements, inherent risks (such as product and service risks), and control risks (such as internal controls for anti-money laundering).

The FSC explained that businesses that have obtained ISMS certification but have not opened real-name verified deposit and withdrawal accounts can change their business operations, such as operating only coin markets, and register accordingly. Additionally, while VASPs have internal rules for anti-money laundering, it was found that dedicated personnel for anti-money laundering are either absent or insufficient. The system for analyzing suspicious money laundering transactions and reporting them to the Financial Intelligence Unit (FIU) was also deemed inadequate.

An FSC official stated, "The system to identify and analyze money laundering risks inherent in virtual asset transactions and to differentiate management levels according to risk is insufficient, resulting in inadequate capability to detect illegal activities such as money laundering crimes."

The FSC communicated the necessary improvements to the VASPs to address the deficiencies revealed by the virtual asset consulting before the registration submission. If the VASPs fulfill the legal registration requirements and compliance systems as per the consulting and submit their registration, the FSC plans to promptly review the applications in order of submission and notify the acceptance status even before September 24.

An FSC official added, "Deficiencies related to the anti-money laundering system will also be checked during the registration review process, and we plan to continuously improve through inspections, supervision, education, and publicity."

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