South Korean lawmakers are seeking to give the country’s Financial Intelligence Unit broader powers to investigate unregistered cryptocurrency businesses, particularly overseas platforms serving Korean users without local authorization.
The proposal, introduced by People Power Party lawmaker Eom Tae young and nine co sponsors, would expand the FIU’s role beyond identifying suspected violations and referring cases to police. If approved by the National Assembly, the agency could investigate suspected illegal operators directly before deciding whether to file complaints, request criminal probes or hand information to other authorities.
Key Takeaways
- Ten South Korean lawmakers have proposed legislation that would expand the FIU’s authority over unregistered crypto businesses.
- The FIU could investigate suspected violations directly rather than relying almost entirely on police follow-up.
- Police suspended or halted 23 of 25 cases involving unregistered virtual asset providers referred by the FIU between August 2022 and August 2025.
- Overseas crypto operators are a major focus because some continue serving South Korean customers without completing mandatory registration.
- The bill remains at the legislative stage and would need National Assembly approval before taking effect.
FIU Could Gain Direct Investigative Powers
The bill seeks to amend South Korea’s Act on Reporting and Using Specified Financial Transaction Information, which forms part of the country’s framework for supervising virtual asset service providers. Under the proposed amendment, individuals would be allowed to report suspected legal violations directly to the FIU. The agency could then examine the allegations, conduct analysis and decide what enforcement action is appropriate. That could include filing a formal complaint, requesting a criminal investigation or passing information to investigators.
The change would mark a significant expansion of the FIU’s current enforcement role. Today, the regulator can identify crypto businesses suspected of operating without registration, but it largely depends on police and other authorities to pursue cases.
South Korean law already requires cryptocurrency businesses that actively target domestic users to register with the FIU, including foreign companies that provide services to Korean customers. The regulator said in June that 28 virtual asset service providers were registered in the country and that roughly 40 suspected illegal operators had been referred to investigative authorities.
Overseas Operators Have Complicated Enforcement
The bill follows concerns that the existing referral system has struggled to deal with foreign crypto companies. According to Yonhap, police suspended investigations or preliminary inquiries into 23 of 25 unregistered virtual asset service providers referred by the FIU between August 2022 and August 2025. Many of the companies and individuals involved were reportedly based outside South Korea.
That creates practical problems for local enforcement agencies, particularly when suspects, business infrastructure or records are located in another jurisdiction.
Supporters of the proposal argue that allowing the FIU to investigate earlier in the process could help authorities gather stronger evidence before police or prosecutors become involved. The bill’s stated rationale also points to the risk that unregistered operators can be used for money laundering, unauthorized currency exchange and cross border remittance activity.
Some foreign platforms have allegedly reached Korean customers through Telegram, KakaoTalk, YouTube and online communities rather than establishing a formal local presence.
South Korea Keeps Tightening Crypto Oversight
The proposal fits into a wider regulatory push aimed at strengthening supervision of both domestic exchanges and cross border digital asset activity.
South Korea has already introduced or considered tougher reporting obligations for overseas-linked crypto transfers and suspicious transactions. New foreign exchange requirements are also expected to add compliance obligations for companies involved in international crypto transfers. At the same time, the FIU has faced legal challenges over some of its enforcement actions against registered exchanges.
Courts have reviewed sanctions involving major operators such as Dunamu, the company behind Upbit, as well as Bithumb and Coinone. Those disputes show that regulators are also being tested on how far their existing authority can extend.
The latest bill appears designed to address a different weakness: unregistered businesses that remain outside the formal supervisory framework altogether.
Conclusion
South Korea’s proposed FIU reform would give regulators a more direct route to investigate crypto companies suspected of operating without authorization. The need for stronger enforcement has become more pressing as overseas platforms continue to reach Korean users while remaining difficult for domestic police to investigate. The fact that 23 of 25 FIU referrals were suspended or halted highlights the limits of the current system. Still, the proposal is not yet law. It must pass through the National Assembly, and its final wording could change during the legislative process.
If adopted, the measure would give the FIU a much larger role in the early stages of crypto enforcement and could make it harder for unregistered foreign platforms to serve South Korean customers without facing closer scrutiny.
