The enforcement decree to the Act on Reporting and Using Specified Financial Transaction Information, which for the first time introduces a fitness review for major shareholders of virtual asset service providers, will take effect this month. With an exceptional acceptance of filings when violations are minor or punished under the joint penal provisions, the burden on corporations is expected to ease.
According to financial authorities on the 11th, the enforcement decree amendment passed a Cabinet meeting review in the afternoon and will take effect on the 20th. Before implementation, the Financial Intelligence Unit (FIU) of the Financial Services Commission and the Financial Supervisory Service will meet on the 13th with domestic virtual asset service providers (VASP) and firms preparing to become providers to explain the amendment and hear industry suggestions, then reflect them in subordinate regulations.
The core of the amendment is the establishment of review standards for major shareholders of virtual asset service providers. Authorities included not only the largest shareholder but also key shareholders as "major shareholders" subject to oversight, and required submission to the FIU at the time of filing of major shareholders' personal information and equity status, as well as financial soundness and whether there have been violations of economic-related laws.
These standards also apply to existing providers. Even providers that have already filed must submit strengthened internal control systems and materials related to major shareholders to the authorities by Nov. 20. The Financial Services Commission (FSC) said it will accept filings when violations are deemed minor. Through a provider briefing this week, it is expected to discuss detailed judgment criteria and make the rules more specific.
During the process of pushing the amendment to the act, the virtual asset industry had voiced concern that, unlike other financial sectors, the act lacks joint penal provisions or exceptions for minor violations. If a major shareholder falls under grounds for disqualification, it would immediately lead to rejection of the filing, raising concerns that even a trivial legal violation could block the business itself.
Under the newly established exceptions, even if a major shareholder falls under grounds for disqualification under the act, filings may be accepted by exception if ▲ the entity was punished under joint penal provisions for corporations, or ▲ the FIU head recognizes that the degree of violation is minor.
The amendment also newly includes a financial soundness requirement that virtual asset service providers maintain a debt ratio of 200% or less. As about half of 24 providers for which financial information was confirmed as of the end of last year were found to fall short of this standard, authorities decided to grant a one-year guidance period.