Authorities Mandate Virtual Asset Business Major Shareholders to Report 'Name and Address'

Financial Services Commission Announces Implementation of 'Revised Supervisory Regulations' on 27th
Businesses Must Report Organization, Personnel, IT Facilities, and Internal Controls
Reporting Review May Be Suspended During Investigations by Domestic and Foreign Supervisory Authorities

On the 24th, the Financial Services Commission announced that it will implement the 'Revised Regulations on Reporting and Supervision of Specific Financial Transaction Information (Revised Supervision Regulations)' supplementing the virtual asset service provider reporting system starting from the 27th. This includes delegated matters from the revised Enforcement Decree of the Specific Financial Information Act, which came into effect on March 26.

First, the revised supervision regulations include legal grounds for reporting compliance systems related to virtual asset laws and the status of major shareholders. It added matters related to compliance systems for virtual asset-related laws such as the Specific Financial Information Act and the Act on the Protection of Virtual Asset Users as reporting items.

Specifically, virtual asset service providers are required to report whether they have properly established organizations, personnel, IT facilities, and internal control systems to comply with the law. Until now, these matters were not explicitly stipulated as reporting items, so there was no clear legal basis to understand the compliance system for preventing money laundering and protecting users during the reporting review stage of virtual asset service providers. Additionally, the status of major shareholders, including their names and addresses, is added to the reporting items. Previously, there were no shareholder-related items in the reporting requirements, resulting in a lack of legal grounds to identify the status of major and principal shareholders.

Second, the submission deadlines for change reports are specified differently according to each reporting item. The Enforcement Decree delegated the authority to specify submission deadlines for change reports by reporting item through notification. The revised supervision regulations stipulate that △ for changes in major shareholder status, business location, and other matters, the change report must be submitted within 14 days from the date the reporting item changed △ if it takes time to prepare documents certifying changes such as information on information security management system certification, the report must be submitted within 30 days from the date of change △ for other matters such as changes in representatives or executives, the change report must be submitted at least 30 days before the change date.

Third, financial companies issuing real-name verified deposit and withdrawal accounts are required to establish risk assessment guidelines for virtual asset service providers. The essential physical facility requirements are also specified in detail. It is stipulated that IT systems facilitating the smooth provision of real-name verified deposit and withdrawal accounts and systems capable of detecting and identifying risks of money laundering through these accounts must be equipped.

Fourth, procedures for suspending and resuming the review of virtual asset service provider reports have been introduced. When a virtual asset service provider submits a report or change report, if △ criminal proceedings are ongoing against the reporting provider, representatives, executives, or major shareholders △ investigations or inspections by financial authorities or investigative agencies are underway and the content of such litigation or investigations significantly affects the review △ fact-finding procedures are in progress, legal grounds are established to suspend the review until these procedures are completed. Notably, investigative agencies include not only domestic supervisory bodies such as the Financial Services Commission, Financial Intelligence Unit (FIU), Prosecutor's Office, and Financial Supervisory Service but also equivalent foreign supervisory agencies. Furthermore, it is mandated to review every six months whether to resume the suspended review to enhance predictability for the parties involved.

The revised supervision regulations will apply immediately to the review of new, change, and renewal reports of virtual asset service providers starting June 27. Existing virtual asset service providers must report the newly added major shareholder status and virtual asset-related legal compliance system matters within three months from the enforcement date according to the revised supervision regulations.

The Financial Services Commission stated, "We will complete the revision of the virtual asset service provider reporting manual reflecting the contents of the revised Enforcement Decree of the Specific Financial Information Act and the revised supervision regulations, including detailed reporting procedures and review-related matters, and tentatively disclose it in early July."

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