Push to Expel Virtual Asset Service Providers Lacking Qualifications, Including 'Negligence in Anti-Money Laundering'

If virtual asset service providers such as virtual asset exchanges and wallet custody and management operators are likely to be involved in money laundering or criminal activities, a plan to reject their business registration is being promoted.

On the 26th, according to the National Assembly and financial authorities, Yoon Chang-hyun, a member of the People Power Party, is expected to take the lead in proposing a partial amendment to the "Act on Reporting and Using Specified Financial Transaction Information" (Special Act on Financial Transactions, or Special Act on Virtual Assets).

The current Special Act on Virtual Assets stipulates that virtual asset service providers must report to the financial authorities and receive approval. The validity period of the report is three years, and renewal applications must be submitted at least 45 days before the expiration of the validity period. Although it is formally a reporting system, it is effectively operated as a licensing system.

Under the current law, financial authorities may refuse to approve the report of virtual asset service providers. However, the grounds for refusal are mainly limited to formal requirements such as whether the information security management system certification has been obtained and whether a real-name verified deposit and withdrawal account has been issued. Accordingly, there have been criticisms that there is a lack of clear legal grounds to refuse registration even when there is a need to maintain financial transaction order, such as concerns about inadequate anti-money laundering measures by virtual asset service providers.

The amendment bill provides specific grounds to refuse registration for those who violate or are highly likely to violate the "Act on the Protection of Virtual Asset Users," the "Financial Investment Services and Capital Markets Act," and other virtual asset-related laws prescribed by presidential decree, or who submit false information or omit necessary details in the application or other attached documents.

Furthermore, while the current law does not allow attaching conditions (legally binding conditions) when approving registration, the amendment bill allows the head of the Financial Intelligence Unit (FIU) to impose necessary conditions to prevent money laundering and financing of public intimidation, protect virtual asset users, and establish financial transaction order.

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