From the 25th March, all businesses dealing with virtual assets in Korea will be expected to report their activity to the FSC body. Korean citizens who hold crypto- assets on foreign exchanges, are equally expected to report these as of next year if they reach a certain threshold.
The amendment to the Act on Reporting and Using Specified Financial Transaction Information (the Specified Financial Information Act), requires all businesses to report to their crypto-related business to the Korea Financial Intelligence Unit.
The Korea Herald reported the financial watchdog’s comments on this matter:
- “Customers should check the registration status of the existing operators and whether the business will continue to run before making virtual asset transactions so that they do not suffer damage”.
Last year an amendment was added to the Specified Financial Information Act which required “virtual assets service providers,” including cryptocurrency exchanges, to report to Korea’s Financial Intelligence Unit (“FIU”) together with anti-money laundering obligations with regard to virtual assets services.
This amendment provided cryptocurrency exchanges in Korea with a legal basis for their operations, while also mandating transparent reporting. The most recent amendment to this act, now requires all businesses who trade, hold, or transact with cryptocurrency to declare this or face severe penalties.
While this may open the gates to greater corporate adoption in Korea, it is also difficult to implement, as many companies choose to use foreign exchanges to hold their digital assets. A government official commented on this quandary:
- “It is difficult for the government to identify virtual assets held outside of Korea. Even if we do, there is a limit to forcefully collect tax money … We will continue to seek out supplementary measures to prevent foreign exchanges from becoming places to conceal virtual property,”.
Businesses and individuals face heavy penalties If these new financial requirements are not met. If businesses fail to report by Sept. 24 they will face up to five years of imprisonment or fines of up to 50 million won. Individuals who do not report their foreign held assets, will be required to pay a fine of up to 20% of unreported holdings.
Crypto exchanges are required under this amendment to accurately hold and report verified customer information and transaction details, or face a possible shutdown.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.