South Korea's virtual asset service providers face stricter compliance requirements under amendments to the Act on Reporting and Using Specified Financial Transaction Information taking effect August 20. The revised law introduces major shareholder screening, expands anti-money laundering obligations, and requires enhanced internal control systems. The regulatory changes reflect lawmakers' intent to subject virtual asset operators to standards comparable to traditional financial institutions.
Amended Law Introduces Major Shareholder Screening Requirements
The Financial Services Commission's Financial Intelligence Unit will screen major shareholders in addition to existing checks on representatives and executives. Major shareholders include the largest shareholder and special relations, shareholders holding 10% or more stakes, and shareholders exercising substantial influence. Regulators will examine criminal records across an expanded list of applicable laws, financial health, and social credibility of representatives, executives, and major shareholders before approving virtual asset service provider registrations.
Providers must demonstrate adequate organization, personnel including anti-money laundering staff, IT systems, and internal control systems with compliance monitoring and independent audit functions. The screening encompasses the entire governance structure of virtual asset service providers.
Travel Rule Expands to All Virtual Asset Transfers
Anti-money laundering obligations strengthen significantly under the amended law. The Travel Rule currently applies only to transfers of 1 million won or more between domestic virtual asset service providers. The revised requirement removes amount restrictions and applies to all transfer transactions.
Domestic providers conducting transfer transactions with overseas virtual asset service providers must evaluate the foreign operator's anti-money laundering measures and permit transactions based on assessment results. The law permits transactions with overseas operators meeting Financial Action Task Force standards while restricting transactions with operators in high-risk countries or unlicensed operators. These overseas transaction rules take effect January 1, 2027 on a phased basis.
Existing Providers Must Re-Register Within Three Months
Article 3 of the amended law's supplementary provisions requires virtual asset service providers who completed registration under the previous law to re-register within three months of the law taking effect. The re-registration process involves substantive review of major shareholder eligibility, financial soundness, and internal control systems not examined during initial registration.
Providers Face Four Key Preparation Requirements
Virtual asset service providers must prepare for compliance regardless of registration status. Required preparation steps include clarifying the scope of shareholders and special relations classified as major shareholders under the amended law, conducting advance checks on criminal records and financial soundness of major shareholders, strengthening anti-money laundering personnel and compliance monitoring organizations, and accelerating system development to handle expanded Travel Rule requirements. Providers must establish risk assessment systems for overseas operators and individual wallet transactions as these directly affect business sustainability.
FAQ
What is the deadline for existing virtual asset service providers to re-register under the amended law?
Existing providers who completed registration under the previous law must re-register within three months of August 20 when the amended Act on Reporting and Using Specified Financial Transaction Information takes effect.
Who qualifies as a major shareholder subject to screening under the amended law?
Major shareholders include the largest shareholder and special relations, shareholders holding 10% or more of shares, and shareholders exercising substantial influence over the virtual asset service provider. Regulators will examine their criminal records, financial health, and social credibility.
