The South Korea Financial Intelligence Unit and Financial Supervisory Service released a revised reporting manual for virtual asset service providers, translating strengthened registration requirements effective Aug. 20 into operational standards. The framework expands screening to major shareholders and introduces detailed tests covering financial condition, social credibility, anti-money laundering staffing, IT systems and internal controls. These compliance arrangements will be assessed for their adequacy and actual operation, including through on-site inspections where necessary. The manual requires at least four anti-money laundering personnel, subject to permitted dual roles, and sets a 200% debt-to-equity ceiling while excluding customer deposits and certain unsettled balances from liabilities. IT systems processing unique identifiers or personal credit information must be located in South Korea, with domestic cloud regions accepted. Changes involving major shareholders or compliance systems will require notification 30 days in advance rather than within 14 days afterward, and implementation before regulatory acceptance may trigger criminal or administrative sanctions. The manual also clarifies that noncustodial wallets may fall outside the reporting regime where providers lack exclusive control over private keys, based on factors including their ability to transfer assets independently or generate, access or decrypt keys. The authorities plan to finalize and implement the manual on Aug. 20. Providers already registered on that date must submit information under the amended framework by Nov. 20, although the new rejection and cancellation standards for their financial condition and compliance systems will apply after a one-year transition. An industry inquiry system will support implementation and collect operational concerns.

Original source