The National Policy Committee of the National Assembly approved a revision bill on Reporting and Using Specified Financial Transaction Information on Crypto Assets on November 25. The revised bill imposes anti-money laundering (AML) requirements on crypto-asset business operators and stipulates requirements with which financial institutions must comply in transaction with crypto-asset business operators.
The revision bill will be reviewed by the Legislation & Judiciary Committee before it is presented at a plenary session for the final passage. If passed at the National Assembly, the bill will take effect one year after promulgation.
► REQUIREMENTS FOR CRYPTO-ASSET BUSINESS OPERATORS
Crypto-asset business operators are required to report their transactions to the Korea Financial Intelligence Unit (KoFIU) under the FSC; subject to basic AML requirements (e.g. customer due diligence, suspicious transaction reporting, etc.); and bound to follow additional obligations such as keeping separate transaction details for users.
If crypto-asset business operators fail to report to KoFIU, they may face criminal penalties of maximum five years of imprisonment or fine of up to KRW50 million.
► REQUIREMENTS FOR FINANCIAL INSTITUTIONS
Financial institutions are required to conduct customer due diligence on crypto-asset business operators and check whether they report their crypto-asset business to KoFIU and maintain customer deposits in a separate account.
If crypto-asset business operators fail to report their business to the KoFIU or are deemed as high-risk for money laundering, financial institutions are obliged to refuse (or terminate) such transactions.
► EFFECTIVE DATE
The bill will take effect one year after its promulgation to give crypto-asset business operators and financial institutions time to adapt and prepare for the new regulatory regime.
It will also give existing crypto-asset business operators a six-month transition period to report to KoFIU after the bill takes effect.
► SUPERVISION AND INSPECTION
KoFIU Commissioner will be in charge of supervision while the responsibilities for inspection may be delegated to the Financial Supervisory Service (FSS).
* Please refer to the attached PDF for details.