South Korea expands AML checks to major shareholders, enables conditional VASP licences
South Korea’s National Assembly on 29 January 2026 approved amendments to the Act on Reporting and Using Specified Financial Transaction Information that significantly expands AML scrutiny of virtual asset service providers (VASPs). The law requires background checks not only on exchange executives but also on major shareholders, and it widens disqualifying offences to include drug trafficking, tax fraud, serious economic and financial crimes, fair‑trade violations and breaches of crypto user‑protection rules. The Financial Intelligence Unit (FIU) gains broader authority to evaluate applicant firms’ financial health, internal controls, legal records and overall credibility before granting licences. Regulators can issue conditional licences with specific AML and user‑protection requirements and demand internal reforms; firms must also notify and retain records when former employees are sanctioned for AML violations. The amendments take effect six months after enactment, allowing the FIU and the Financial Services Commission time to publish implementation guidance. Separately, regulators are re‑examining rules that force exchanges to keep a single banking partner and considering caps on major shareholders’ exchange stakes, treating exchanges more like market infrastructure. Primary keywords: South Korea crypto law, AML checks, Financial Intelligence Unit. Secondary keywords: VASP licensing, major shareholders, conditional licences, exchange regulation.
Neutral
The amendment tightens licensing and governance for exchanges and VASPs, which increases compliance costs and raises operational uncertainty in the short term—factors that can be negative for exchange token sentiment. However, the law also introduces clearer standards, FIU oversight and conditional licences that reduce regulatory ambiguity over the medium to long term. Clearer rules and stronger AML controls can improve institutional confidence in South Korean crypto markets, potentially stabilizing liquidity and attracting compliant flows. Because the change affects regulatory process and governance more than token fundamentals or protocol-level changes, the net price effect on crypto broadly is likely muted: short-term volatility could be elevated around enforcement or licence-denial headlines (bearish pressure), but longer-term impact is neutral to modestly positive for market stability as compliance reduces regulatory tail-risk.