TLDRKorean legislators propose enhanced investigative authority for FIU regarding unlicensed cryptocurrency platformsNew powers would enable FIU to conduct preliminary investigations before law enforcement referralsProposed legislation addresses regulatory loopholes exploited by foreign crypto service providersLaw enforcement discontinued 23 out of 25 cases involving unlicensed operators referred by FIUAdditional cross-border cryptocurrency regulations scheduled for implementation in December 2026Lawmakers in South Korea have introduced legislation granting expanded enforcement capabilities to the Financial Intelligence Unit targeting unlicensed cryptocurrency enterprises. The proposed measure would enable the FIU to conduct preliminary investigations into potential violations prior to escalating matters to law enforcement agencies. This legislative initiative addresses significant regulatory challenges posed by international cryptocurrency platforms serving Korean clientele.Legislative Proposal Strengthens FIU Oversight CapabilitiesOn Thursday, Representative Eom Tae-young from the People Power Party, alongside nine co-sponsors, submitted the amendment proposal. The legislation seeks to modify the Act on Reporting and Using Specified Financial Transaction Information. If enacted, it would provide the FIU with substantially enhanced jurisdiction over potentially unlicensed virtual asset service providers.According to the bill, any individual would gain the ability to submit reports concerning suspected regulatory violations directly to the FIU. Following receipt of such reports, the agency would possess authority to conduct comprehensive investigations and analysis before determining appropriate action. Additional powers would include filing formal complaints, requesting criminal proceedings, or transmitting evidence to investigative bodies.Currently, South Korea mandates that cryptocurrency businesses targeting domestic consumers must obtain FIU registration. Nevertheless, the agency predominantly depends on police intervention after identifying potentially unlicensed operations. The proposed legislative changes would significantly expand the FIU’s direct involvement throughout preliminary enforcement stages.International Crypto Platforms Present Enforcement ChallengesHistorical enforcement data reveals substantial difficulties involving suspected operators headquartered beyond South Korean borders. Between August 2022 and August 2025, police discontinued investigations or preliminary inquiries regarding 23 of 25 cases referred by the FIU. According to Yonhap’s reporting, the implicated companies and associated individuals were predominantly situated in foreign jurisdictions.The FIU disclosed in June that 28 virtual asset service providers maintained active registrations within South Korea. Simultaneously, the regulatory body had forwarded approximately 40 suspected unauthorized operators to investigative agencies. International entities are equally obligated to register when actively delivering cryptocurrency services to South Korean citizens.Regulatory authorities have documented various tactics employed by international platforms to access customers without domestic authorization. Certain operations marketed cryptocurrency services via Telegram, KakaoTalk, YouTube platforms, and digital forums. Additional operators facilitated direct exchanges involving digital currencies, Korean won, and alternative fiat currencies.South Korea Expands Comprehensive Cryptocurrency Regulatory FrameworkSouth Korea has simultaneously intensified supervision of authorized exchanges and international digital asset movements. Previous proposals focused on overseas-connected transfers and suspicious activity reporting obligations for domestic trading venues. Domestic exchanges contended that expansive reporting requirements could dramatically escalate compliance burdens.Judicial bodies have examined multiple FIU enforcement measures against prominent South Korean cryptocurrency enterprises. A Seoul court reversed a partial operational suspension imposed on Dunamu following accusations concerning unregistered international platforms. Bithumb and Coinone similarly obtained provisional judicial protection in distinct regulatory proceedings.Forthcoming foreign exchange regulations will introduce additional compliance obligations for international cryptocurrency transfers. Entities managing such transactions must secure finance ministry registration when the framework becomes effective in December. The FIU legislation requires National Assembly approval before the proposed enforcement mechanisms achieve legal status. The post South Korea Pushes for Enhanced FIU Authority Over Unlicensed Crypto Exchanges appeared first on Blockonomi.