<p>South Korea’s Financial Supervisory Service (FSS) has initiated on-site consultation services for virtual asset businesses to help them comply with the upcoming Virtual Asset User Protection Act (Virtual Asset Act), which is set to be effective in July. This <a href="https://www.news1.kr/articles/5331795" rel="noopener noreferrer nofollow">news</a> was reported yesterday by local media outlet News1.</p><h3 id="supporting-vasps-in-preparation-for-the-virtual-asset-act">Supporting VASPs in preparation for the Virtual Asset Act</h3><p>The consultation services offered by the FSS are fundamentally different from the on-site inspections that have been conducted by the Financial Intelligence Unit (FIU).</p><p>Until now, the FIU has been conducting on-site inspections to ensure virtual asset service providers (VASPs) have adequate anti-money laundering (AML) systems in place and comply with the Act on Reporting and Using Specified Financial Transaction Information (the Financial Transaction Information Act).</p><p>While the FIU has been tasked with conducting inspections, the FSS’s latest on-site consultation services are dedicated to supporting business in developing new monitoring systems, which would enable them to prevent unfair transactions ahead of the implementation of the Virtual Asset Act.</p><p>The FSS has already begun providing consultation services, with the local crypto exchange Upbit being its first client last week. An insider of FSS stated that the schedule for the on-site consultation will be arranged in advance for those seeking the service.</p><h3 id="demand-for-new-fds">Demand for new FDS</h3><p>During a roundtable meeting with VASP CEOs held on Feb. 7, Lee Hyun-deok, the director of the Virtual Asset Regulatory Bureau under the FSS, emphasized the importance of coming up with a new fraud detection system (FDS) specifically designed to block unfair transactions. Most of the current FDSs within local crypto exchanges are focused on AML.</p><p>Unlike the Financial Transaction Information Act which mainly focuses on AML, the Virtual Asset Act focuses on punishing unfair trading practices that exploit abnormal price fluctuation or undisclosed information. The FSS recommends that VASPs implement a new system preventing such practices by April, as the Virtual Asset Act’s enactment is just around the corner.</p><p>An FSS insider said there is a high chance that VASPs will get the consultation service multiple times on various themes since a lot has to be done before the Act takes effect in July, adding that this consultation is to encourage VASPs to comply with the law rather than to conduct inspections on them.</p>

Korea offers on-site consultation for virtual asset businesses for law compliance

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