South Korea to Overhaul AML Rules in Response to Stablecoin Growth

The Financial Intelligence Unit (FIU), South Korea’s top anti-money laundering (AML) authority, has announced plans to reorganize its AML protocols in anticipation of the institutionalization of stablecoins. The move aims to strengthen regulatory oversight ahead of potential stablecoin legislation being considered by the National Assembly. The FIU will conduct external research and compile a report by December this year to serve as the foundation for developing updated AML measures tailored to the stablecoin sector [1].

The FIU has indicated it is likely to propose amendments to the Specific Financial Information Act, which could lead to significant changes in how stablecoins are regulated. The regulator is expected to impose new entry restrictions and business conduct rules, particularly focusing on the security of assets backing stablecoins and data reporting requirements. An FIU official emphasized that these changes will help “improve and supplement the existing system” and respond to evolving risks in the virtual asset industry [1].

Currently, the FIU plays a central role in overseeing domestic cryptocurrency exchanges and ensuring AML compliance. This proposed reorganization suggests the FIU may take on a broader role in regulating stablecoin issuers, even as the government restructures its financial regulatory framework. Earlier this year, President Lee Jae-myung had announced plans to merge the operations of the Financial Services Commission (FSC)—the FIU’s parent agency—with the finance ministry and the Financial Supervisory Service. However, recent government announcements have not mentioned the FSC’s abolition, and the Blue House has already assigned it crypto-related responsibilities for 2025 [1].

The FIU’s research will also include an analysis of international stablecoin regulations, signaling its intent to align South Korea’s approach with global best practices. Several stablecoin-related bills are currently being discussed in the National Assembly, though details remain under debate, including the possibility of enabling stablecoin lending services. Experts note that the absence of a clear legal definition for stablecoins in South Korean law presents a key regulatory challenge [1].

Stablecoin adoption has raised concerns globally, with organizations like the Financial Action Task Force (FATF) warning of increased money laundering risks. The Bell Korea highlighted that while the U.S. and other countries have moved quickly to develop countermeasures, South Korea lags behind, lacking a comprehensive regulatory system [1].

In the private sector, major South Korean banks and tech firms have already begun preparing for the stablecoin era. Some have registered trademarks related to stablecoin activities, while others have established dedicated business units to explore the market. Analysts expect companies like Kakao and Naver—both with extensive digital ecosystems spanning e-payments, banking, and software-as-a-service (SaaS)—to play a leading role in the country’s stablecoin development [1].

South Korea’s evolving regulatory landscape reflects growing recognition of the potential and risks associated with stablecoins. The FIU’s upcoming report and the legislative discussions in the National Assembly will be critical in shaping how the country integrates stablecoins into its financial system while mitigating AML risks.

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Source:

[1] South Korean Regulator to Reorganize AML Protocols Ahead of Stablecoin Legislation (https://cryptonews.com/news/south-korean-regulator-reorganizes-aml-protocols-ahead-of-stablecoin-legislation/)