South Korea intends to enhance its supervision of cross-border cryptocurrency transactions

In order to combat foreign exchange crime, South Korea’s finance minister, Choi Sang-Mok, has announced that the country will implement reporting mandates for cross-border crypto transactions.

Choi Sang-Mok, South Korea’s finance minister, is reported to have stated at a G20 meeting in Washington that the country intends to enhance supervision of cross-border transactions involving crypto in order to combat tax evasion and “foreign exchange” offences.

In an Oct. 24 report from the local Korean news outlet Edaily, Choi stated that South Korea will implement a reporting mandate for any business that conducts “cross-border transactions” involving crypto assets.

Choi stated, “We will encourage the preemptive surveillance of virtual asset transactions that are employed for currency manipulation and tax evasion across borders.”

Pre-registration with the appropriate authorities and monthly reporting of all details to the Bank of Korea will be mandatory for any business that conducts cross-border crypto transfers under the new regulations.

Choi stated that the tax and customs services of the country are presently unaware of cross-border crypto transactions. Criminals may conceal illicit proceeds and engage in unlawful transactions by taking advantage of the case-by-case character of enforcement.

Since 2020, digital assets have been implicated in 81% of foreign exchange crimes, which accounts for approximately $1.2 billion, according to the Korea Customs Service.

However, prior to the implementation of new regulations, the government must establish a suitable legal foundation for them.

The finance minister anticipates that the legal revisions will be finalized by the first half of 2025, and the new reporting mandates will be implemented by Q2.

South Korea has recently implemented a comprehensive set of new regulations to safeguard cryptocurrency investors.

Virtual asset service providers (VASPs) in the country were required to adhere to more stringent regulations in order to safeguard user assets, as a result of the Virtual Asset Protection Act coming into effect on July 19.

VASPs are mandated by law to obtain insurance coverage for malevolent attacks and breaches. Additionally, they require providers to maintain a clear separation between user assets and exchange tokens, while also maintaining customer deposits in institutions and conducting regular reviews of token listings on exchanges.

South Korea will also administer stringent penalties to those who engage in crypto crime, such as imprisonment and sanctions that are three to five times the value of the fraudulently acquired profits.

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