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South Korea’s Anti-Money Laundering-related law, the Act on Reporting and Using Specified Financial Transaction Information, has been amended and went into effect on 25 March 2021.
Under the amended act, VASPs are required to register their business with the Korea Financial Intelligence Unit (KoFIU) prior to the commencement of their business operations, and existing businesses that qualify as VASPs are required to complete such registration within six months.
In October 2018, the Financial Action Task Force (FATF) adopted changes to its recommendations on financial activities involving digital assets, adding the definitions ‘virtual asset’ (VA) and ‘virtual asset service provider’ (VASP).
Upon registration, VASPs will be subject to various AML obligations, such as verifying the identity of their customers and filing reports on suspicious transactions. The financial authorities will conduct inspections of VASPs and supervise their compliance with AML obligations from the time of their business registration.
The amended act also provides that any offshore activity outside South Korea that has domestic effects or consequences shall be subject to the act. Accordingly, the KoFIU has sent out notices to 27 offshore VASPs with business operations ‘targeting users in Korea’ regarding their obligation to register with the KoFIU by 24 September 2021.
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