South Korea tightens AML rules for exchanges

TLDR

South Korea has passed stricter anti-money laundering rules that raise the bar for licensing and supervising crypto exchanges and other virtual asset service providers.

1. Lawmakers expanded AML background checks to major shareholders of exchanges and empowered the Financial Intelligence Unit to grant or deny licenses more flexibly.
2. The tougher regime will increase compliance costs, could force governance changes at big Korean exchanges, and may accelerate consolidation toward a smaller, more regulated set of venues.
3. The key next steps are FIU implementation guidelines, potential ownership caps near 1520 percent, and how aggressively regulators move against offshore platforms serving Korean users.

Deep Dive

1. What Changed In The AML Rules

South Koreas National Assembly approved amendments to the Act on Reporting and Using Specified Financial Transaction Information, the core statute behind its crypto AML regime. The changes tighten the licensing framework for virtual asset service providers (VASPs), including exchanges, wallets and trading platforms.[^1]

Under the revised law, background checks will now cover not only executives but also controlling and major shareholders, with disqualifying offenses expanded to include financial crimes, drug trafficking, tax evasion, serious economic crimes and breaches of crypto user-protection laws.[^1]

The Financial Intelligence Unit (FIU) gains broader discretion to assess applicants financial health, internal controls, legal history and overall credibility, and it can issue conditional licenses that impose extra AML or user-protection requirements before full approval.[^1] The law is expected to take effect roughly six months after enactment.

2. How This Affects Exchanges And Users

Domestic exchanges will face more intensive fit-and-proper checks on their ownership and governance, plus ongoing monitoring obligations such as documenting criminal background checks on 10 percent-plus shareholders each year.[^2] That raises fixed compliance costs, which tends to favor larger, well-capitalized platforms over smaller entrants.

Regulators are also openly pushing tighter governance. The Financial Services Commission (FSC) has backed proposals to cap major shareholders stakes in crypto exchanges around 1520 percent, arguing exchanges now function as public infrastructure and should resemble securities markets in ownership structure.[^3]

3. What To Watch Next

Implementation is not finished. The FIU still needs to publish detailed guidance on how it will apply the new powers, what documentation exchanges must provide, and how conditional licenses will work in practice.[^1]

In parallel, the broader Digital Asset Basic Act is being drafted, where the proposed ownership caps and additional rules on stablecoin issuance and exchange authorization are likely to land.[^3] Political resistance from industry and parts of the ruling party means some measures could be softened or delayed, so the final text matters for market structure.

Enforcement will also be key. South Korea already requires all VASPs serving Korean users to register and implement AML protocols, but some offshore exchanges have continued operating via apps and web access despite previous FIU deadlines.[^4] How regulators close that gap will shape where Korean trading volume goes.

Conclusion

South Korea is moving toward a higher-standards, bank-like regime for crypto exchanges, combining tougher AML checks on owners with stronger supervisory powers for the FIU and FSC. That could improve trust and attract more institutional participation, but it also raises barriers to entry and may push some activity to offshore venues if enforcement is uneven. For crypto users and projects exposed to the Korean market, the next wave of FIU guidance and the Digital Asset Basic Act will be the key regulatory catalysts to track.

[^1]: Summary of the amendment tightening VASP licensing and AML checks in South Korea from CoinTelegraphs coverage of the Act on Reporting and Using Specified Financial Transaction Information. [^2]: Details on mandatory annual checks and reporting for major shareholders from a CoinsKid Community explainer on the new Korean AML amendment. [^3]: Explanation of proposed 1520 percent ownership caps and public infrastructure framing for exchanges from recent coverage of FSC Chair Lee Eog-weons comments. [^4]: Background on registration rules and enforcement gaps for offshore exchanges serving Korean users from a CoinsKid Community analysis of FIU registration and app-store issues.