Financial Authorities Strengthen Shareholder Review for Virtual Asset Businesses and Urge Reporting Preparation

The financial authorities are strengthening the review of major shareholders, financial status, and internal control systems of Virtual Asset Service Providers (VASPs) in accordance with the revised Specific Financial Information Act. Existing reporting businesses have been requested to expedite their preparations as submitting materials related to major shareholders may take time. At a briefing held on the 13th at the Dream Plus Gangnam Main Hall in Seoul, Ha Joo-sik, the Director of the Financial Intelligence Unit (FIU), stated that businesses that have completed their previous reporting must report matters related to major shareholders within three months after the law comes into effect. This reform of the reporting system stems from the need to review the soundness of businesses due to the expansion of the virtual asset market. Director Ha emphasized that the market has changed significantly since the introduction of the reporting system for virtual asset businesses in 2021. The revised Specific Financial Information Act expands the scope of review for reporting and includes criminal record checks for major shareholders, as well as sound financial status and internal control systems as subjects of review. Director Ha explained that this regulatory enhancement aligns with the regulatory directions of the Financial Action Task Force (FATF) and major countries. Existing businesses should be cautious in preparing materials related to major shareholders, and if the largest shareholder is a corporation, they must also verify information regarding the largest shareholder and representative of that corporation. The financial authorities plan to communicate with the industry regarding issues that arise during the reporting preparation process.

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