A legislative proposal has been introduced by a collective of South Korean lawmakers to bolster the authority of the Financial Intelligence Unit (FIU), enabling it to investigate crypto businesses that operate without proper registration. The proposed amendment to an existing financial law would give the FIU the power to investigate suspected violations and directly refer unregistered crypto operators to law enforcement agencies.

On Thursday, Eom Tae-young of the People Power Party, along with nine other legislators, filed the bill, which seeks to introduce a new provision into the Act on Reporting and Using Specified Financial Transaction Information.

Proposed New Powers

If the bill becomes law, it would empower the FIU significantly. Under the proposal, any individual would be able to report suspected illicit activities to the agency. The FIU would then be authorized to conduct its own investigations and analysis of these alleged violations.

Furthermore, the unit could file complaints with the appropriate authorities, request formal criminal investigations, or supply investigators with relevant information. This represents a substantial shift from the current system, where the FIU can identify suspected unregistered operators but must depend on the police or other authorities to initiate and conduct any investigation.

Rationale for the Change

The push for expanded powers comes amid challenges in prosecuting unregistered entities. According to a report from Yonhap, police suspended investigations or preliminary inquiries into 23 of the 25 unregistered virtual asset service providers that the FIU had referred to them between August 2022 and August 2025. The primary reason for the suspensions was that the companies and the individuals associated with them were reportedly based in foreign countries.

Current Regulatory Status

Under South Korean law, all cryptocurrency companies that provide services to customers within the country are required to register with the FIU. In a June statement, the regulator confirmed that 28 providers had successfully completed registration. At the same time, the FIU noted that it had flagged 40 suspected illegal operators and referred them to investigative authorities.

The newly introduced bill is currently in its initial stage and must secure passage through the National Assembly to officially amend the existing legislation.