In recent times when digital assets are becoming increasingly integral to the financial system, the importance of regulation and oversight cannot be ignored. The Korean Financial Intelligence Unit (FIU), commonly known as the Golden Commission, is taking a massive step in this direction. According to recent reports, the commission is broadening its oversight and sanctioning capabilities on cryptocurrency asset operators in a bid to increase transparency and trust in the burgeoning industry.
Korea To Treat Crypto Operators Like Financial Institutions
In a move highlighting its commitment to financial transparency and accountability, South Korea’s Financial Intelligence Unit (FIU) under the Financial Services Commission has announced plans to publicly disclose the results of its supervisory activities and inspections. These inspections, which include anti-money laundering efforts, have traditionally been performed on a broad range of entities such as financial companies, post offices, casino operators, and, most recently, virtual asset operators.
According to reports, the Financial Services Commission has unveiled changes to the ‘Inspection and Sanctions Regulations for Reporting Specific Financial Transaction Information, etc..’ These alterations amplify the FIU’s existing authority to supervise, inspect, and sanction conferred by the Act on Specified Financial Transaction Information. This step will have a profound impact on the operations of entities dealing in virtual assets, as they will now be subjected to the same level of scrutiny as conventional financial institutions.
The new regulations necessitate that the key findings of the inspections, as well as the actions taken by the FIU or the Financial Supervisory Service, must be disclosed on their official websites within ten days of the final notification to the relevant financial institution.
The FIU is not stopping at mere disclosure, however. There are plans to further expand the scope of inspections and sanctions disclosure against operators of virtual assets. This action is expected to provide an additional layer of security for investors and users, as unethical or illegal behavior will be more readily exposed and addressed.
FIU Strengthens Regulatory Approach
Last month, on the 27th, Lee Yoon-soo, the director of the Financial Intelligence Unit (FIU), spoke at the ‘Virtual Asset Business Compliance Competency Reinforcement Council.’ He outlined a proactive approach for the regulatory body to tackle major crimes related to virtual assets.
Yoon-soo mentioned, “Taking into account the types of major offenses connected to virtual assets, we intend to declare the principal inspection items beforehand. This strategy aims to increase market awareness by periodically exposing instances of business operators’ violations and unjust practices.”
Additionally, Yoon-soo expressed plans to promote transparency. He said, “We are set to roll out a scheme that will openly reveal the reasoning behind and results of any sanctions placed on each virtual asset operator in the near future.”
In an ongoing effort to regulate the cryptocurrency industry, South Korea’s Financial Services Commission (FSC) introduced new asset disclosure rules last month. The bill mandates all companies issuing or handling cryptocurrencies, such as Bitcoin, to disclose their holdings. The decision follows a thorough review of relevant proposals, ultimately leading to the FSC’s approval of this draft legislation for mandatory crypto disclosure.
Additionally, in response to the surge in cryptocurrency-related crimes, South Korea has formed a specialized interagency unit dedicated to investigating these offenses, as reported on July 26. At the same time, a business agreement between the Korea Securities Depository and Code, a firm expert in Travel Rules, aims to promote the use of Legal Entity Identifier (LEI) in the digital asset market.
According to a previous report, the Seoul Southern District Prosecutors Office launched the Joint Investigation Centre for Crypto Crimes, bringing together 30 investigators from seven government entities, including the Financial Supervisory Service and National Tax Service.
