Suspicious Drug and Gambling Accounts to Be Frozen Immediately... Tracking Split Virtual Asset Transactions Under 1 Million Won

The government is pushing to amend the Act on Reporting and Using Specified Financial Transaction Information (the so-called “Special Financial Information Act”) so that accounts suspected of being linked to serious crimes that harm people’s livelihoods, such as drug trafficking, illegal gambling, and terrorism financing, can be frozen immediately without a court decision. The obligation to provide sender and recipient information for virtual asset transactions will also be expanded from the current threshold of transactions of 1 million won or more to transactions of less than 1 million won, in order to block so-called “split transactions” aimed at evading regulation. Stablecoin issuers will be subject to anti-money laundering obligations equivalent to those imposed on financial institutions.

On February 5, the Korea Financial Intelligence Unit (FIU) held the Policy Advisory Committee on Anti-Money Laundering and Counter-Terrorist Financing and announced the “Key Anti-Money Laundering Work Plan for 2026,” which includes these measures.

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First, a legal basis will be established to allow the FIU to decide to suspend accounts suspected of being linked to crimes when there is a request from investigative authorities, among other triggers. Currently, even for accounts suspected of being connected to criminal proceeds, freezing is impossible without a court decision, except for some limited cases such as voice phishing. Through amendments to the Special Financial Information Act, the government plans to expand the scope of crimes eligible for account suspension to encompass a wide range of serious livelihood-harming offenses, including drug trafficking, illegal gambling, and terrorism financing, and to preemptively block the flow of funds that could be used for additional crimes. Under the system, the FIU will decide on the suspension of an account and then request the financial institution to freeze it. In the initial phase, the system will be limited to accounts requested by investigative agencies, but once it is firmly established, the scope will be gradually expanded to include suspicious accounts detected through the FIU’s own analysis.

The scope of persons subject to restrictions on financial transactions will also be expanded from the current focus on those involved in terrorism and the proliferation of weapons of mass destruction to include international criminal organizations. The government will simultaneously pursue amendments to laws related to the prohibition of terrorism financing so that transnational criminal organizations such as the Cambodia Prince Group can be designated as entities subject to financial transaction restrictions and have their transactions frozen. In addition, to strengthen the FIU’s capability to review and analyze suspicious transaction reports, a permanent strategic analysis team will be established with the participation of specialized investigators from the prosecution and the police, and artificial intelligence (AI) will be introduced into the review and analysis system to enhance the precision of analysis.

The government will also comprehensively strengthen the anti-money laundering framework in the virtual asset sector. Currently, the “travel rule” is applied only to virtual asset transactions of 1 million won or more, requiring the originating exchange to provide the receiving exchange with sender and recipient information. This will be extended to transactions of less than 1 million won so that split transactions using small, dispersed amounts can also be tracked. A new obligation will be imposed on receiving exchanges to secure this information. The authorities are also considering introducing additional measures, such as rejecting transactions, when a transaction is deemed suspicious. When domestic exchanges transact with personal wallets or overseas exchanges, only low-risk transactions in which the sender and recipient are the same person will be allowed, in an effort to increase transaction transparency.

Stablecoin issuers will be subject to anti-money laundering obligations equivalent to those imposed on financial institutions under the existing Special Financial Information Act. Obligations such as customer due diligence, suspicious transaction reporting, and internal controls will apply, and when transactions with personal wallets or overseas service providers are deemed to be high risk, enhanced risk management measures will be required. In addition, on-site inspections are planned this year for 5 to 7 small virtual asset service providers that have no history of examinations or inspections.

In response to concerns that such measures could shrink the still-nascent stablecoin market, Ha Jousik, Director of System Operation Planning at the FIU, explained, “The Financial Action Task Force (FATF) also views stablecoins as having relatively high money laundering risks because they are highly likely to become popular as a means of payment,” adding, “The intention is to manage them within the same framework as other virtual assets while embedding control mechanisms such as freezing and burning at the issuance stage, rather than to impose excessive regulations specifically on stablecoins alone.”

Measures will also be pursued to enhance financial institutions’ own anti-money laundering capabilities. The person responsible for reporting under the Special Financial Information Act will be clearly defined as an executive, and participation in the anti-money laundering system implementation assessment, which is conducted twice a year, will be made mandatory. A legal basis will be newly established for sanctions in cases such as entering false information or refusing to submit materials. Financial institutions with high money laundering risk will be subject to intensive inspections and strict sanctions, whereas for those with low risk, a “consent order system” will be introduced, under which sanctions may be deferred on the condition that a corrective action plan is implemented. In addition, the government will prepare plans to introduce anti-money laundering obligations for designated non-financial businesses and professions, such as lawyers, tax accountants, and certified public accountants.

An FIU official stated, “It has been 25 years since the anti-money laundering system under the Special Financial Information Act was introduced, and this is a time when we need to strengthen our capacity to respond to new money laundering challenges such as transnational crime,” adding, “We will prepare the legislative amendment tasks and submit the amendment bill to the National Assembly within the first half of the year, and we will also move swiftly within the first half to amend subordinate regulations such as enforcement decrees.”

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