In line with FATF guidance, South Korea’s amended its Act on Reporting and Using Specified Financial Transaction Information to require virtual asset service providers (VASPs) to register with the local financial regulator, the Korea Financial Intelligence Unit (KoFIU), before undertaking business operations. The amended act also mandated the Crypto Travel Rule for international virtual asset transfers over 1 million won (~USD 865). The crypto travel rule enforcement date is March 25, 2022 in South Korea.
Cryptocurrencies are allowed for use but not considered legal tender in South Korea.
The FSC announced a revision to Korea’s Anti-Money Laundering-related law, the Act on Reporting and Using Specified Financial Transaction Information (FTRA), in March 2021. The revision requires VASPs to register with the Korea Financial Intelligence Unit (KoFIU) and comply with various AML obligations, such as filing reports on suspicious transactions and verifying the identity of their customers.
AML requirements similar to the Crypto Travel Rule have been mandated in South Korea. The Financial Services Commission (FSC) announced a revision to the Anti-Money Laundering-related law, the Act on Reporting and Using Specified Financial Transaction Information Requirements of Virtual Asset Service Provider, which subjects VASPs to the AML requirements.
The Korean Financial Intelligence Unit (KoFIU) is the primary authority responsible for supervising VASP compliance with AML/CFT obligations.
Yes. Korea’s recently amended Anti-Money Laundering-related law, the Act on Reporting and Using Specified Financial Transaction Information, indicates that VASPs must register with the Korea Financial Intelligence Unit (KoFIU) by September 24, 2021.
Among other requirements, To register with the KoFIU, VASPs must
Domestic and foreign VASPs must register with the KoFIU and comply with AML requirements by March 25, 2022.
The amended Act on Reporting and Using Specified Financial Transaction Information went into effect in March 2021; however, all VASPs were given a six-month grace period to comply till September 2021.
Under the Financial Transaction Reports Act (FTRA), the threshold differs depending on the type of transaction, ranging from KRW 1 million (~USD 880) to KRW 3 million (~USD 2640.)
Under the Financial Transaction Reports Act (FTRA), financial institutions are required to identify and verify customer identification information, including name, identification number, address, nationality, contact information, and beneficial ownership for customer due diligence.
Requirements are being developed that may treat crypto transactions as overseas transactions. The Foreign Exchange Transaction Act (FETA) and the Foreign Exchange Transactions Regulations (FETR) regulate the remittance of fiat funds out of Korea to overseas accounts. These regulations ask for the existence of a legal basis, along with supporting documents overseas. In addition, all outbound remittances in an amount exceeding US$3,000 per transaction or a yearly aggregate limit of US$50,000 must be reported to and approved by the Bank of Korea (BOK).
Currently, there are no requirements for transfers to and from non-custodial or self-hosted wallets.
Korean VASPs and global VASPs targeting users in Korea should consider a risk-based approach to crypto compliance. Notabene helps VASPs and financial institutions comply with the Amendment to the Act on Reporting and Use of Certain Financial Transaction Information, closely related to the FATF’s Recommendation 16 “Crypto Travel Rule” as required by the Korea Financial Intelligence Unit (KoFIU.)