South Korea Tightens Crypto AML Regulations

South Korea has taken significant steps to combat financial crimes involving cryptocurrencies by strengthening its Anti-Money Laundering (AML) regulations. The Financial Intelligence Unit (FIU), a sub-section of the Financial Supervisory Commission (FSC), is leading the country's AML efforts. The regulatory measures aim to enhance the security and safety of digital asset trading and transactions.

The FIU has organized an AML Inspection Trustee Council, led by FIU Director Park Kwang, to improve anti-money laundering regulations. The council consists of 11 leading oversight bodies, including the Financial Supervisory Service and the Ministry of the Interior and Safety. The gathering focused on identifying new money laundering methods, such as the use of virtual accounts and easy remittance services in digital financial deals.

One of the main initiatives of the gathering was the formation of a Joint Response Team. This team, comprising financial institutions and government agencies, will address public AML crimes, including voice phishing, multi-level fraud and gambling, and drug-related financial crimes that use crypto transactions. The FIU is working to maintain uniformity in AML inspection protocols and develop mechanisms for the swift exchange of vital risk indicators to detect criminal conduct.

The FIU is also focusing on strengthening the oversight of high-risk operators and expanding inspections. In 2024, Korea Customs Service inspections found that 45 out of 77 money exchange operators violated AML regulations. The FIU, along with other regulatory entities, will concentrate its inspections on high-risk operators through a risk classification system based on transaction numbers and financial crime exposure in 2025.

The Financial Supervisory Service (FSS) plans to conduct exams of financial institutions that have not recently received AML inspections. Financial institutions must enhance their AML collaboration and enforcement standards, and their departments will work more closely with protection services. The Ministry of the Interior and Safety, along with other agencies, will be responsible for financial institution compliance inspection of customer identification requirements to fight financial crimes more effectively.

South Korea's initiatives to strengthen AML frameworks align with international regulatory trends. As the cryptocurrency industry grows, world authorities are attempting to establish control mechanisms and protection systems for this sector. The government is committed to building a safer financial framework to stop the rising threats of cryptocurrency theft, fraud, and misuse. The government is intensifying its financial crimes analysis of cryptocurrency-related offenses, aiming to establish a