Entry regulations for virtual asset service providers will be significantly strengthened. The Financial Services Commission said on the 29th that the amendment to the Act on Reporting and Using Specified Financial Transaction Information had passed the National Assembly's plenary session.
With this amendment, not only representatives and executives but also major shareholders will be subject to criminal background checks when reviewing reports by virtual asset service providers, and the scope of laws subject to review has been greatly expanded. In addition to current laws (the Act on Reporting and Using Specified Financial Transaction Information, the Act on Regulation and Punishment of Criminal Proceeds Concealment, the Financial Investment Services and Capital Markets Act, etc.), entry into the business will be restricted if criminal records are found under the Narcotics Control Act, the Monopoly Regulation and Fair Trade Act, the Punishment of Tax Evaders Act, the Act on the Aggravated Punishment of Specific Economic Crimes, and the Virtual Asset User Protection Act.
In addition, the Korea Financial Intelligence Unit (FIU) will be able to comprehensively assess the practical management capabilities of virtual asset service providers, including financial soundness, social credit, internal control systems, and compliance with laws and regulations. Even at the time of accepting a report, a conditional approval system for anti-money laundering and user protection has been introduced, establishing a legal mechanism to control risk factors in the course of business operations.
In addition, to close the sanction blind spot for retirees of financial companies, a new provision requires the FIU to notify the head of the relevant financial company of sanction details against former executives and employees found to have violated the Act on Reporting and Using Specified Financial Transaction Information. The company must convey this to the retiree and is required to keep related records.
The Financial Services Commission (FSC) said the amendment is expected to block the entry of unqualified operators, such as those with criminal histories, establish order in the virtual asset market, and promote sound industry growth. The retiree sanction notification system is also expected to enhance the effectiveness of sanctions, strengthening internal controls and ethics in the financial sector.
The amended law is scheduled to take effect about six months after promulgation, in August, and the Korea Financial Intelligence Unit plans to complete revisions to subordinate statutes and prepare industry guidelines by then.