Transferring virtual assets in amounts under 1 million won to evade anti-money laundering regulations will become more difficult. The Financial Services Commission's Financial Intelligence Unit (FIU) announced that the threshold for the 'travel rule' applicable to transactions between virtual asset service providers has been eliminated, requiring the provision of sender and receiver information for all virtual asset transfers. Additionally, scrutiny of the financial health and major shareholders of virtual asset service providers will be intensified.
The FIU stated on August 11 that a revision to the Enforcement Decree of the Act on Reporting and Using Specific Financial Transaction Information was approved at a Cabinet meeting.
First, the scope of the travel rule for virtual asset transfers between registered domestic service providers will expand from transactions over 1 million won to include all transactions. Recipients will also be obligated to request sender and receiver information or refuse transactions if such information is missing.
This measure aims to prevent so-called 'split transfers' that circumvent regulations by repeatedly conducting transactions under 1 million won. According to the FIU, a case of suspected money laundering was identified where approximately 200 million won worth of virtual assets was purchased and then transferred externally in 216 transactions, each under 1 million won, over a three-month period.
The obligations for anti-money laundering will also be strengthened for transactions with overseas virtual asset service providers and personal wallets. Service providers must differentiate transaction allowances based on the risk level of the counterparties. Transactions with low-risk overseas exchanges will be permitted, while transactions with other overseas exchanges or personal wallets will only be allowed if the sender and receiver are the same, and high-risk transactions will be prohibited.
Furthermore, for transactions exceeding 10 million won with overseas exchanges or personal wallets, service providers must establish and operate their own suspicious transaction management systems. The FIU explained that these regulations have been strengthened due to an increase in suspected money laundering transactions involving personal wallets and overseas exchanges.
The evaluation process for registering virtual asset service providers will also become stricter. Major shareholders subject to evaluation will now include shareholders who appoint a majority of the board of directors or the representative director. If the largest shareholder is a corporation, the largest shareholder and representative of that corporation will also be included. Financial health and social credit requirements for service providers and major shareholders have been specified. In principle, virtual asset service providers must maintain a debt ratio of 200% or lower and must not have harmed credit order due to defaults in the past three years. Executives and representatives must meet the qualification requirements under the Financial Company Governance Act. Existing providers will have a one-year grace period for the debt ratio requirement.
* This article has been translated by AI.
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