‘Crypto’ added to voice-phishing restitution… expanded obligations for exchanges

The government will impose on virtual-asset exchanges voice-phishing victim-prevention obligations on par with those required of financial institutions. The scope of eligible victim assets will also be expanded to include virtual assets, widening the range of cases eligible for restitution.

The Financial Services Commission (FSC) said on the 12th that a revision to the “Special Act on Prevention of Damage from Telecommunications-Based Financial Fraud and Refund of Victim Assets” (Telecommunications Fraud Victim Refund Act) was passed at a plenary session of the National Assembly. The core of the revision is to impose on virtual-asset exchanges the same level of obligations to prevent voice phishing and provide victim relief as financial institutions. An FSC official said, “General financial institutions such as banks have fulfilled voice-phishing prevention duties by continuously monitoring suspicious transactions,” adding, “By contrast, virtual-asset exchanges had limitations in responding swiftly to crimes because they had no such obligations under the current law.”

Specifically, virtual-asset exchanges must verify the purpose of virtual-asset transactions and continuously monitor whether funds suspected of being linked to voice phishing are circulating. If a crime is suspected, they must immediately take measures such as suspending payouts on the relevant account. The government also plans to strengthen inter-agency coordination by having virtual-asset exchanges participate in ASAP (AI platform for sharing and analyzing voice-phishing information), which enables sharing of suspected voice-phishing transaction information.

Victim protection measures will also be expanded. Under the existing Telecommunications Fraud Victim Refund Act, victim assets were limited to “money,” making it difficult to provide relief in crimes involving virtual assets. The revision expands the scope of victim assets to include virtual assets, enabling refunds even when virtual assets were directly stolen or when criminals converted money into virtual assets.

If the victim so wishes, legal procedures will also be established allowing a virtual-asset exchange to sell the relevant virtual assets and pay out the proceeds in cash. The measure is intended to reduce inconvenience that victims with limited experience in virtual-asset trading may face during the conversion process and to help ensure meaningful recovery of losses.

The revision will take effect in October, six months after promulgation. The FSC plans to refine related systems by preparing detailed standards, including revisions to subordinate regulations, before the law takes effect.

The FSC said the revision is expected to eliminate regulatory blind spots and block channels used to launder criminal proceeds. “We have built a dense response framework that includes the virtual-asset trading domain to prevent voice-phishing crimes that exploit the rapidly changing financial environment,” the FSC said, adding that it “will be able to provide victims with faster and more effective opportunities to recover their assets.”