South Korean financial authorities have reportedly amended their proposed changes to the Specific Financial Information Act (SFIA), easing the reporting rules that targeted large crypto transactions.
FIU Drops Reporting Requirements For Crypto Transfers
On Friday, the Financial Services Commission’s Financial Intelligence Unit (FIU) reportedly decided to ease its proposed reporting requirements for certain overseas crypto transactions.
In March, the regulator proposed amendments to the Specific Financial Information Act, which is South Korea’s primary legal and regulatory framework governing digital assets, cryptocurrencies, and Anti-Money Laundering (AML).
The amendments initially required domestic operators to report crypto transfers exceeding 10 million Korean won, worth about $6,400, as suspicious transactions when involving overseas platforms or private wallets, regardless of assessed risk.
Now, instead of mandating reporting regardless of risk level, the FIU has decided to require each company to operate its own AML risk management system. “If we use only the threshold of 10 million won as the reporting criterion, companies would report uniformly without assessing risk; therefore, we will require each company to operate its own management system so that they can conduct qualitative assessments of risky transactions,” an official stated.
According to local reports, the financial authority reached this decision after meeting with crypto exchange representatives earlier this week to gather industry feedback on the proposed amendments to the SFIA.
Last month, the Digital Asset Exchange Joint Council (DAXA) submitted a statement opposing the proposed changes to the AML framework. Based on feedback from 27 virtual asset service providers (VASPs), the group warned that implementing the amendments would likely create confusion in practice.
In addition, DAXA affirmed that the rules would make compliance nearly impossible, noting that suspicious transaction reports from South Korea’s five largest exchanges could surge from about 63,408 cases last year to 5,445,133 under the proposal, a massive jump that would be hard to manage in daily operations.
Compliance Requirements Eased, Travel Rule Unchanged
The stricter customer due diligence rules included in the amendment are likely to be eased, the Friday report highlighted. The original draft mandated enhanced customer due diligence for crypto transactions classified as high-risk or suspicious, including verification of the source of funds and the purpose of the transaction.
Now, companies will only be required to conduct enhanced customer due diligence for transactions deemed particularly high-risk. Regulators will also allow a one-year “grace period” for the debt-to-equity ratio requirement in virtual asset business registration, easing the original rule for small businesses that may struggle to meet the 200% threshold.
However, the policy expanding the travel rule to cover transactions below 1 million won will remain unchanged, after previously applying only to transfers above this figure between domestic virtual asset service providers. The revised bill will take effect on August 20 if it passes the review by the Ministry of Government Legislation and other relevant agencies, the report said.
These changes come as the country prepares to revisit its long-delayed crypto tax law, which is set to take effect in January 2027. As reported by Bitcoinist, lawmakers are expected to review the upcoming crypto taxation after a petition to abolish the framework surpassed the required signatories to be discussed in the National Assembly last month.
The total crypto market capitalization is at $2.08 trillion in the one-week chart. Source: TOTAL on TradingView
Featured Image from Unsplash.com, Chart from TradingView.com
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