A group of South Korean lawmakers has introduced legislation that would expand the investigative powers of the country’s Financial Intelligence Unit (FIU) and give the agency greater authority to pursue crypto businesses operating without required registration.
The bill, introduced by People Power Party lawmaker Eom Tae-young and nine other lawmakers, proposes amendments to the Act on Reporting and Using Specified Financial Transaction Information.
If approved, the changes would allow the FIU to play a more direct role in investigating suspected violations involving unregistered virtual asset service providers (VASPs).
Proposed Law Would Strengthen FIU Enforcement
Under the proposed amendments, members of the public would be able to report suspected violations directly to the FIU.
The agency would then have broader authority to investigate and analyze suspected violations, file complaints with relevant authorities, request criminal investigations and provide information to investigative agencies.
The legislation remains at the proposal stage and must pass South Korea’s National Assembly before becoming law.
Under the existing framework, the FIU can identify and refer suspected unregistered crypto operators to law enforcement, but it generally depends on police and other investigative authorities to conduct formal investigations.
Many Cases Involving Unregistered Operators Were Dropped
The proposed expansion comes after questions emerged over the effectiveness of the current enforcement system.
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.
The companies and individuals involved were reportedly based overseas, highlighting the difficulties South Korean authorities face when attempting to enforce domestic registration requirements against foreign-based crypto businesses serving local users.
Lawmakers supporting the proposal appear to be seeking a more direct enforcement mechanism that could allow the FIU to investigate suspected violations rather than relying primarily on referrals to other agencies.
South Korea Tightens Oversight of Crypto Platforms
Crypto businesses providing services to customers in South Korea are required to register with the FIU.
The regulator said in June that 28 virtual asset service providers were registered, while 40 suspected illegal operators had been referred to investigative authorities.
The proposed legislation would therefore represent another step in South Korea’s broader effort to strengthen oversight of the digital asset sector.
If enacted, the expanded FIU powers could make it more difficult for unregistered exchanges and other crypto platforms, particularly overseas operators targeting Korean customers, to operate without regulatory scrutiny.
For the crypto industry, the proposal signals that South Korea is moving beyond registration requirements toward more active enforcement against platforms operating outside the regulatory framework.
