When Screening Virtual Asset Service Providers, Authorities Will Also Review Major Shareholders’ Criminal Records
Summary
- With the passage of the amendment to the Specified Financial Transaction Information Act, authorities said they will be able to review major shareholders’ criminal records, financial condition and social creditworthiness when virtual asset service providers file registration reports.
- They said authorities can review virtual asset service providers’ financial condition, social creditworthiness, organization, personnel, IT systems and internal control frameworks, and impose conditions for anti-money laundering and user protection.
- Authorities said rules were also introduced allowing the FIU to notify the head of a financial institution of sanctions imposed on employees who resigned after violating the Specified Financial Transaction Information Act.
Rules to Notify Sanctions on Former Employees Also Introduced
Going forward, entry regulations will be tightened so that, when virtual asset service providers file registration reports, authorities can review major shareholders’ criminal records, financial condition and social creditworthiness.
The Financial Intelligence Unit (FIU) under the Financial Services Commission said on the 29th that an amendment to the Act on Reporting and Using Specified Financial Transaction Information passed the National Assembly plenary session. Previously, only the criminal records of representatives and executives could be reviewed, but authorities will now be able to assess whether major shareholders have criminal records as well. The laws subject to review have also been expanded—from the Specified Financial Transaction Information Act, the Act on Regulation and Punishment of Criminal Proceeds Concealment, the Act on Prohibition of Terrorist Financing, the Foreign Exchange Transactions Act, and the Capital Markets Act (fines or heavier)—to include the Act on the Prevention of Illicit Drug Trafficking, the Monopoly Regulation and Fair Trade Act, the Punishment of Tax Offenses Act, the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, the Act on the Protection of Virtual Asset Users (fines or heavier), and other laws (imprisonment or heavier).
Authorities may also review whether virtual asset service providers have the financial condition and social creditworthiness, as well as appropriate organizations and personnel, IT systems, and internal control frameworks necessary to comply with laws related to virtual assets. In addition, a new legal basis has been created allowing regulators to attach binding conditions—such as for anti-money laundering and user protection—when accepting a registration report. Separately, rules were introduced enabling the FIU to notify the head of a financial institution of sanctions imposed on employees who resigned before being sanctioned for violations of the Specified Financial Transaction Information Act.
Reporter Seo Hyung-kyo seogyo@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
