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South Korean lawmakers have introduced legislation that would give the Financial Intelligence Unit direct authority to investigate suspected violations of the country’s anti-money laundering law, including cases involving unregistered crypto businesses.
People Power Party lawmaker Eom Tae-young and nine other lawmakers filed the amendment on August 20. The proposal follows evidence that most police cases involving unregistered operators referred by the FIU have stalled.
FIU Could Investigate Violations Before Requesting Police Action
The bill would amend South Korea’s Act on Reporting and Using Specified Financial Transaction Information, which contains registration and anti-money laundering requirements for virtual asset service providers.
Anyone could report a suspected violation directly to the FIU. If the agency received a report or independently suspected a violation, it could investigate and analyze the conduct before filing a complaint, requesting a criminal investigation or providing information to the relevant investigative authority.
The FIU currently identifies suspected unregistered operators and refers cases to law enforcement, but the proposed amendment would give it an explicit investigative role before that referral.
Police Suspended 23 of 25 Unregistered VASP Cases
Police suspended investigations or preliminary inquiries into 23 of 25 unregistered crypto operators referred by the FIU between August 2022 and August 2025. One case was sent to prosecutors and another remained under investigation.
The companies and related individuals were based overseas, making it difficult for Korean police to continue the cases unless the suspects entered the country. As of June, 28 VASPs were registered with the FIU. The agency had also referred 40 suspected illegal operators to investigative authorities since August 2022.
Unregistered Operators Face Up to Five Years in Prison
Foreign crypto companies must register when they conduct business targeting Korean customers. Regulators consider factors including Korean-language services, won payment support and marketing aimed at Korean users.
Operating without registration can carry up to five years in prison or a fine of up to ₩50 million. The FIU can also request domestic website and app blocking and direct registered VASPs not to transact with identified unregistered operators.
The proposal arrived the same day tighter VASP registration rules took effect, expanding scrutiny of major shareholders, financial condition and management qualifications.
Eom’s amendment remains a legislative proposal. It must clear the National Assembly and take effect before the FIU can exercise the new investigative powers.
