South Korea Tightens Crypto Rules to Fight Financial Crimes

Highlights:

• South Korea is making stricter rules to stop money laundering through crypto.
• A new task force will track fraud, phishing, and transactions to stop financial crimes.
• Authorities are watching Japan’s move and may follow if Bitcoin ETFs get approval.

South Korea has imposed tougher measures to combat money laundering via cryptocurrencies. The FIU is leading this effort within the Financial Services Commission (FSC), and FIU officials met with key institutions today to devise new strategies. The meeting aimed to align the Anti-Money Laundering (AML) policies with the mounting financial crimes. Authorities want to tighten inspections and deal with the shortcomings of the existing system.

🇰🇷 South Korea’s FIU Tightens AML Oversight to Tackle #Crypto Crimes: Report

South Korea’s financial authorities tighten AML controls to address new money laundering risks in the #crypto sector. pic.twitter.com/4jqk8GnQHT

— CryptOpus (@ImCryptOpus) March 5, 2025

Under the leadership of FIU head Park Kwang, the AML Inspection Trustee Council convened experts from 11 agencies. The Korea Federation of Mutual Savings Banks, the Ministry of the Interior and Safety, and the Financial Supervisory Service participated in the initiative.

The group reconsidered potential new money laundering threats related to virtual accounts and fast remittance services. Officials also discussed ways to better detect and prevent such crimes. The FIU stressed the requirement of a standardized AML inspection process.

New Task Force Formed to Address Financial Crimes in Crypto

Financial experts and law enforcement will join forces to form the People’s Livelihood Crime AML Joint Response Team, which will combat financial crimes. The team will work closely with the Financial Supervisory Service as well as other institutions. The task force will then monitor new risks on a bimonthly basis.

In particular, officials are focusing on voice phishing, multi-level fraud, illegal gambling, and drug-related transactions. They will scrutinize patterns of transactions to spot suspicious activity. At the same time, the FIU will oversee financial institutions to make sure they are complying with AML. Businesses with poor AML controls will face more attention. In addition, institutions that had previously failed inspections will undergo renewed assessments to ensure they comply with the set rules.

Last year, the Korea Customs Service found AML violations in 45 of the 77 money exchange operators, where they pointed out weaknesses in online and unmanned services. This year, authorities will assign businesses into risk categories. Companies deemed to be high-risk will be targeted for inspection to prevent illegal transactions.

Other agencies, however, will take on the responsibility of making cooperative financial institutions abide by AML. South Korea’s Financial Intelligence Unit (FIU) recently granted Upbit a three-month partial suspension of its business due to non-compliance.

South Korea Evaluates Next Steps for Crypto Oversight

The authorities are also looking at global regulation of crypto policies. They are paying close attention to Japan’s thinking regarding Bitcoin exchange-traded funds (ETFs). Since last year, the Financial Services Commission has been discussing Bitcoin ETFs.

According to PANews, South Korean regulators are closely watching Japan before deciding on spot cryptocurrency ETFs. Reports suggest that if Japan approves a Bitcoin ETF, South Korea may follow. pic.twitter.com/ZcRMHjjbCl

— Keen Crypto (@KeenCrypto1) March 5, 2025

According to a South Korean news outlet, South Korean regulators are monitoring the situation in Tokyo. Traditionally, Japan has opted for a cautious approach to cryptocurrencies. Japanese regulators have recently been considering reclassifying crypto as an investment tool. They are reviewing the possibility of approving crypto ETFs such as Bitcoin. South Korean authorities could take similar steps if Japan officially approves crypto ETFs.