Reasons for Proposal
1. Reason for Proposal
Under the current law, the reporting obligations of virtual asset service providers and the grounds for rejection of such reports are stipulated. Specifically, if the virtual asset provider is a corporation, the law specifies that the report may be rejected unless a certain period has passed after the completion or exemption of a sentence for violations of financial-related laws, including the "Act on the Regulation and Punishment of Criminal Proceeds" and other presidential decree-designated laws, by the virtual asset provider or the company's representative or executives.
However, in cases of crimes related to virtual currencies, such as fraud or embezzlement, large-scale user damage may occur. Currently, violations of the "Act on the Punishment of Specific Economic Crimes" are not included in the grounds for rejection of the report, which has raised the need for improvement.
Additionally, while the law stipulates the criminal record requirements for the representative or executives of a corporate virtual asset provider, it does not have any requirements regarding the criminal history of the major shareholder, who can have a substantial impact on the virtual asset business. This creates a legal gap in regulating major shareholders involved in illegal activities such as money laundering from participating in virtual asset businesses.
2. Key Contents
To address these issues, the proposal includes adding violations of the "Act on the Punishment of Specific Economic Crimes" to the grounds for rejection of virtual asset service provider reports, and expanding the scope of examination to include the criminal history of major shareholders involved in virtual asset businesses. This aims to ensure the soundness of the virtual asset market, prevent virtual asset service providers from being misused as conduits for illegal activities such as money laundering, and contribute to establishing a healthy and transparent financial transaction order.
a. Require the reporting of information related to the major shareholder of a virtual asset service provider when submitting a report (New Article 7, Paragraph 1, Item 1-2).
b. Include violations of the "Act on the Punishment of Specific Economic Crimes" in the grounds for rejecting reports, and extend the scope of the rejection criteria to include the major shareholders of virtual asset service providers (New Article 7, Paragraph 3, Item 3).
Major Provisions
Imposing an obligation on virtual asset service providers to report additional shareholder information, such as the major shareholder’s name (New Article 7, Paragraph 1, Item 1-2).
