South Korea Financial Services Commission announces National Assembly passage of amendments expanding KoFIU checks on virtual asset service provider major shareholders and enabling sanctions notifications

South Korea’s Financial Services Commission announced that the National Assembly has passed amendments to the Act on Reporting and Using Specified Financial Transaction Information, tightening market entry and ongoing oversight for virtual asset service providers (VASPs) and introducing a mechanism to notify financial companies of sanctions imposed on their retired employees. Under the amended framework, the Korea Financial Intelligence Unit (KoFIU) will be able to conduct criminal background checks on VASP major shareholders during registration screening, extending checks beyond chief executives and other executive officers. The scope of prior misconduct to be screened will expand to include offences such as illegal narcotics trafficking, fair trade violations, tax offences, specific economic crimes, and breaches related to virtual asset user protection. KoFIU will also be able to assess VASPs’ financial condition and social credibility, as well as whether they have adequate organisational capacity, staffing, computer networks and internal controls to comply with relevant rules, and it will have an explicit basis to impose conditions after registration to support anti-money laundering and user protection. Separately, KoFIU will be authorised to notify financial companies when sanctions are imposed on their former employees for violations of the Act, with firms required to inform the individuals concerned and keep records of the notification. The amendments are set to take effect six months after promulgation, expected from August 2026. KoFIU plans to update subordinate statutes to support implementation.