South Korea Lawmakers Move to Give FIU Direct Crackdown Power on Unregistered Crypto Firms

A group of South Korean lawmakers led by People Power Party representative Eom Tae-young has introduced legislation to expand the Financial Intelligence Unit's (FIU) authority over unregistered cryptocurrency operators. The bill, filed on Thursday alongside nine co-sponsors, seeks to amend the Act on Reporting and Using Specified Financial Transaction Information by granting the FIU direct investigative powers, including the ability to refer suspected violators to law enforcement and request criminal probes.

The proposal comes in response to a stark enforcement gap. According to Yonhap, police suspended investigations or preliminary inquiries into 23 of 25 unregistered virtual asset service providers referred by the FIU between August 2022 and August 2025, with most operators and related individuals based overseas. Under the current framework, the FIU can flag suspected illegal operators but must rely on police and other authorities to pursue cases—a system that has produced limited results despite the regulator identifying 40 suspected illegal operators and 28 registered providers as of June.

If passed, the amendment would also allow any member of the public to report suspected violations to the FIU, which could then independently investigate, analyze allegations, file complaints with relevant authorities, and share information with criminal investigators. The bill remains in the introduction stage and must clear the National Assembly before it can take effect, but it signals a more aggressive posture toward crypto enforcement as South Korea tightens oversight of digital asset service providers targeting its domestic market.