South Korea Seeks Direct Investigative Powers Over Illegal Crypto Firms

The proposed amendment to the Specific Financial Information Act would empower the FIU to independently analyze suspected violations, file formal complaints, and request criminal investigations. Currently, the agency identifies potential offenders but must rely on police or other law enforcement bodies to pursue cases. This reliance has proven ineffective, particularly regarding foreign-based operators that often evade domestic scrutiny once a case leaves the FIU's jurisdiction.

Foreign entities have increasingly targeted South Korean residents through encrypted messaging platforms like Telegram and KakaoTalk, often operating under the radar by facilitating private exchanges for tourists and students. These unregistered businesses pose significant risks, including potential money laundering, fraud, and the inability for users to recover assets during insolvency. If passed by the National Assembly, the bill would allow the FIU to gather evidence and build cases internally, ensuring a more seamless transition to judicial authorities.

This legislative push follows a broader effort to tighten controls over the virtual asset sector. Regulators are simultaneously preparing for the December implementation of revised foreign exchange rules, which will require companies handling cross-border crypto transfers to register with the Ministry of Economy and Finance. These combined measures signal a shift toward stricter oversight of both domestic and international platforms serving the South Korean market.