South Korea FIU bill targets unregistered crypto firms with new powers

South Korean lawmakers have introduced legislation that would give the Financial Intelligence Unit direct authority to investigate suspected unregistered crypto businesses instead of relying mainly on police referrals.

Yonhap reported that People Power Party lawmaker Eom Tae-young and nine other lawmakers filed the amendment on Thursday, proposing new powers under the Act on Reporting and Using Specified Financial Transaction Information, commonly known as the Specific Financial Information Act.

Under the bill, any person could report a suspected violation of the law directly to the FIU. Once a report is received, the financial intelligence agency would be allowed to investigate and analyze the suspected conduct before deciding whether further action is required.

The proposal would also allow the FIU to file complaints with relevant authorities, request criminal investigations, and hand information gathered during its review to investigators. Such powers would change the current process, under which the FIU can identify suspected unregistered operators but must depend on police and other investigative agencies to pursue most cases.

The bill has only been introduced and must pass the National Assembly before the proposed changes can take effect.

Lawmakers proposed the additional powers after enforcement data raised questions over how effectively cases involving overseas crypto operators were being pursued once they left the FIU.

According to Yonhap, police suspended investigations or preliminary inquiries into 23 of the 25 unregistered virtual asset service providers referred by the FIU between August 2022 and August 2025.

The companies and people connected to the cases were reportedly located outside South Korea, making investigations more difficult for domestic law enforcement agencies.

Giving the FIU investigative and analytical powers at an earlier stage would allow the agency that first identifies suspected registration violations to collect information before a case moves to another authority.

South Korea requires companies providing virtual asset services to residents of the country to register with the FIU, including foreign companies that actively serve South Korean customers.

As crypto.news previously reported, the FIU said in June that only 28 virtual asset service providers were registered at the time, while about 40 suspected illegal operators had been referred to investigative authorities.

The regulator said foreign businesses must follow the same registration requirements when they provide services to South Korean residents. Companies seeking registration must also meet local compliance requirements, including Information Security Management System certification.

The FIU's June enforcement warning provided details on how some unregistered foreign crypto businesses were reaching South Korean customers while attempting to limit their visible presence in the country.

According to the agency, some overseas operators recruited customers through Telegram and KakaoTalk open chat rooms while offering customer service in English, a setup regulators said could make their domestic activities less obvious.

Authorities also identified private currency exchange businesses selling stablecoins and other virtual assets to international students, tourists, foreign workers and people seeking transactions without disclosing their identities.

Some operators exchanged digital assets directly for Korean won or other fiat currencies, while promoters were paid to advertise foreign crypto services through YouTube channels, Telegram groups and online communities, the FIU said.

The agency warned that customers using unregistered services could face exposure to fraud, hacking and personal data leaks. Because such businesses operate outside the registered system, the FIU also said users could have difficulty recovering funds when an operator failed to deliver purchased assets.