South Korea Lawmakers Push Bill to Expand FIU Crypto Investigation Powers

Highlights:

• South Korea’s FIU could investigate suspected violations before referring serious cases to other authorities.
• The new bill would give the FIU more power to investigate unregistered crypto firms directly.
• Overseas crypto firms serving local customers must follow the country’s registration and compliance rules.

People Power Party lawmaker Eom Tae-young and nine colleagues introduced a bill Thursday targeting unregistered crypto businesses. The bill would amend the Specific Financial Information Act to let the FIU investigate suspected unregistered crypto operators directly in South Korea.

South Korean Lawmakers Push Tougher Oversight of Illegal Crypto Operators

South Korean lawmakers are seeking stronger FIU powers to investigate unregistered crypto firms and suspected violations.

The proposal follows difficulties pursuing unregistered operators, many of which… pic.twitter.com/qYJfrx7Rwl

— BABA CRYPTO (@babacryptoio) August 21, 2026

Under the bill, anyone could report suspected violations of the law directly to the FIU. The agency could investigate reported conduct and analyze evidence before deciding whether the suspected violation requires further action.

The FIU could file complaints with relevant authorities when its investigation finds evidence of suspected legal violations. It could also request criminal investigations and share collected information with investigators handling suspected violations. The FIU currently identifies suspected unregistered crypto operators but relies on police and other authorities to pursue most investigations. The lawmakers want the FIU to investigate suspected registration violations before referring cases to police or other investigative authorities.

The proposed powers cannot take effect unless the National Assembly passes the amendment. Lawmakers have introduced the bill, but the National Assembly must approve it before the FIU receives the new authority.

South Korea FIU Gets More Authority

Police suspended investigations or preliminary inquiries into 23 of 25 FIU referrals. The referrals involved suspected unregistered virtual asset service providers identified by the FIU. The companies and related individuals reportedly operated overseas, making the cases harder for South Korean investigators to pursue. The proposed authority would let the FIU gather information before referring suspected violations to another investigative body.

Crypto companies providing virtual asset services to South Korean residents must register with the FIU. Foreign crypto businesses actively serving South Korean customers must follow the same registration requirement. Crypto businesses seeking registration must also meet local compliance requirements, including Information Security Management System certification. The FIU reported in June that 28 virtual asset service providers had registered under South Korean requirements.

The FIU also referred about 40 suspected illegal crypto operators in South Korea to investigative authorities in June. Some unregistered overseas operators reportedly recruited customers through Telegram and KakaoTalk open chat rooms.

JUST IN: South Korea's central bank warns that expanding institutional adoption could increase the risk of crypto volatility spilling into traditional financial markets. pic.twitter.com/bMpRUc3eWR

— The Moon Show (@TheMoonShow) June 24, 2026

Overseas Crypto Firms Face More Scrutiny

Domestic exchanges recently opposed a proposal requiring reports for overseas-linked crypto transfers worth at least 10 million won. DAXA estimated annual suspicious transaction reports could rise from about 63,000 to more than 5.4 million. The estimate covered Upbit, Bithumb, Coinone, Korbit and Gopax. DAXA argued that an automatic threshold could flag ordinary transfers without considering customer or counterparty risks.

In April, a Seoul court overturned the FIU’s three-month partial suspension of Upbit operator Dunamu. The FIU had alleged 44,948 transactions involving 19 unregistered overseas platforms. Meanwhile, Bithumb secured a court stay against a six-month partial suspension after regulators alleged verification failures and dealings with unregistered foreign companies. Coinone also received temporary court relief over anti-money laundering and customer verification measures.

From December, companies handling cross-border virtual asset transfers must register with the Ministry of Economy and Finance. The government promulgated the revised Foreign Exchange Transactions Act on June 2, with a six-month grace period.