"Preparation for Stablecoin Institutionalization" Financial Authorities Commission AML Research Project

The Financial Intelligence Unit (FIU) under the Financial Services Commission (FSC) has begun reviewing the anti-money laundering (AML) regulatory framework in preparation for the institutionalization of stablecoins.

According to industry sources on the 9th, the FIU commissioned a research project on June 6, titled 'Research on Improvements to AML Systems Related to Phase 2 Virtual Asset Legislation and Stablecoins.' The goal of this study is to block illegal financial transactions involving virtual assets (cryptocurrencies) and to develop supplementary measures in line with global regulatory trends. The research period runs until December 12.

This project will analyze AML risks in newly applicable business activities and issuance structures due to the introduction of the Phase 2 Virtual Asset Act. It will also distinguish between domestic and international issued stablecoins, examine AML and combating the financing of terrorism (CFT) regulations throughout the process of issuance, circulation, and redemption, and review the roles and obligations of major industry participants.

Based on this, the FIU plans to identify shortcomings in domestic regulations and propose improvements by comparing with overseas cases. Potential risk elements will be assessed, along with the consideration of proportional regulatory measures to mitigate those risks.

The FIU believes that institutionalizing stablecoins will have a significant impact on the overall financial system, including payments and cross-border remittances. The Financial Action Task Force (FATF) has also warned since last year that organizations linked to North Korea, terrorist financiers, and drug trafficking organizations are increasingly using stablecoins for illicit money laundering. According to the FATF, 85 out of 163 countries have already legislated the 'Travel Rule,' with 14 more countries preparing for implementation.

An FIU official stated, "Since discussions on stablecoin legislation are underway in the National Assembly and FATF recommendations are ongoing, it is necessary to enhance and adjust AML and CFT regulatory frameworks."