South Korea to Penalize Crypto Exchanges Over AML Compliance Failures

The Korea Financial Intelligence Unit (FIU), South Korea’s financial watchdog, is to impose penalties on domestic digital asset exchanges, including Bithumb, Coinone, Korbit, and GOPAX, after failing to comply with anti-money laundering (AML) rules. The FIU has been actively operating and conducting campaigns against anti-money laundering failures that could destroy the country’s reputation in the fast-growing cryptocurrency market. The recent violations, including deficiencies in Know-Your-Customer (KYC) checks and suspicious transactions reporting, are similar to those by Dunamu, operator of Upbit. Dunamu violated the Specific Financial Information Act (SFA)  and was fined 35.2 billion KRW ($24.35 million) on November 6, 2025. 

According to a FIU’s official press release published recently, the FIU conducted on-site inspections of five Korean Won market operators, including Dunamu Co., Ltd., Bithumb Korea Co., Ltd., Streami Co., Ltd., Korbit Co., Ltd., and Coinone Co., Ltd., regarding the country’s anti-money laundering (AML) rules under the Specific Financial Information Act. The press release stated that after deliberation by the Sanctions Review Committee, the FIU had imposed institutional warnings and fines (up to 492 million won) on violators, as well as reprimands and cautions on executives and employees. It also mentioned that the FIU had requested improvements to the identified issues within three months and would closely monitor future implementation, requesting additional improvements if those were insufficient.

South Korean media reported that the penalties are likely to reach a significant amount, and the figure may vary depending on the number of violations and their severity. They also mentioned that the sanctions still pending against the exchanges and the FIU’s sanctions are unlikely to be completed by the end of this year, but most sanctions are expected to be completed by the first half of 2026. 

The FUI Adopts First-In, First-Out Approach to Enforcement

According to the FIU’s official source, three major types of illegal or abnormal activities are spotted. Abnormal transactions, suspicious transactions under another person’s name, and inadequate internal control over virtual asset business are three types reported by the agency. A South Korean media reported that most of the on-site inspections had been completed and that sanctions procedures, including legal review and the convening of a sanctions review committee, were underway. It also reported that the FIU was applying a “first-in, first-out” approach, imposing sanctions on the exchanges it inspected first. Dunamu was fined $24.35 million, and the inside sources claim that the upcoming penalties and “the level of sanctions will not differ significantly from Dunamu’s.”  

The agency is actively monitoring the virtual asset operator’s functioning to prevent all kinds of malicious financial activities and to limit the possibilities of money laundering. The FIU  responded to the fine imposition on crypto exchanges by stating that, considering the inspection was a process of establishing market order for a new business, they had focused on encouraging improvement in business operators. They added that if similar problems to the major illegal and unfair practices disclosed in the future occurred, they would impose more severe sanctions.    

Crypto experts believe that South Korea is enforcing its digital asset rules with renewed severity. Following the Upbit penalty, the FUI is on the verge of slashing more exchanges, and the pressure on exchanges is mounting each day.    

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