1.

New Regulations on Major Shareholders of Virtual Asset Service Providers
 

• The amendment introduces a new regulatory framework governing major shareholders of virtual asset service providers ("VASPs"). Under the amendment, "major shareholders" of VASPs are defined to include (i) the largest shareholder, (ii) any person holding 10% or more of the total outstanding voting shares, and (iii) any shareholder or investor that exercises de facto influence over key management decisions. The amendment adds new requirements concerning major shareholders to the conditions for filing, amending, maintaining, and renewing VASP reports.

• (Reporting) VASPs will be required to report information on their major shareholders as prescribed by Presidential Decree and to file an amended report when any such information changes (Article 7(1)1-2 and Article 7(1)2). Previously, reporting obligations concerning major shareholders were set forth only under a subordinate statute (the Regulation on Reporting and Supervision of Specified Financial Transaction Information), but they will now be formally codified in the Act.

• (Criminal Record Reviews) Under the current regime, criminal record reviews were required only with respect to the VASP itself and its representatives and officers. The amendment expands the scope of this requirement to include major shareholders (Article 7(3)3), who will now be subject to enhanced criminal record review standards (see Section 2 below for more details).

• (Financial Soundness and Social Credibility) The amendment also provides that, when reviewing a VASP filing, the competent authorities must assess the financial soundness and social credibility of its major shareholders, in addition to those of the VASP itself and its representatives and officers (see Section 3 below for more details).
   

2.

Expanded Scope of Laws Covered by Criminal Record Reviews
 

• Under the current Act, a VASP filing may be rejected if the applicant (the VASP itself, its representatives and officers, and now, major shareholders) has been sentenced to a criminal fine or more severe penalty for violating certain "finance-related statutes." The amendment expands the scope of relevant statutes to include the Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics, the Monopoly Regulation and Fair Trade Act, the Act on the Aggravated Punishment of Specific Economic Crimes, and comparable foreign laws. In addition, the amendment provides that a VASP filing may also be rejected where the applicant has received an unsuspended sentence of imprisonment or heavier penalty for violating certain other laws (including, for example, foreign laws relating to finance or anti-money laundering), thereby significantly broadening the scope of the laws covered by the review.

• However, for convictions based on conduct that occurred prior to the effective date of the amendment, the previous (current) version of the Act will continue to apply (Article 4 of the Addendum).
   

3.

New Review Criteria Relating to Financial Soundness and Social Credibility
 

• The amendment introduces a new ground for rejecting a VASP filing where the VASP or its representatives, officers, or major shareholders fail to satisfy the standards of financial soundness or social credibility criteria to be prescribed by Presidential Decree (Article 7(3)5). The specific definitions and assessment criteria for "financial soundness" or "social credibility" will be further detailed in forthcoming amendments to the Enforcement Decree of the Specified Financial Information Act.

• In addition, the amendment adds several other grounds for rejection, including: (i) failure to maintain an appropriate organizational structure, personnel, IT facilities, or internal control framework to comply with applicable virtual asset laws; (ii) submission of false information or omission of required information in the registration filing or accompanying documents; and (iii) other circumstances prescribed by Presidential Decree for purposes including preventing money laundering or terrorism financing, ensuring sound and transparent practices in financial transactions, and protecting virtual asset users (Articles 7(3)6 through 7(3)8).
   

4.

Introduction of Conditional Acceptance Regime for VASP Filings
 

• The amendment authorizes the Commissioner of the Korea Financial Information Unit ("KOFIU") to attach conditions to the acceptance of VASP filings or amendments thereto, where such conditions are deemed necessary to prevent money laundering or terrorism financing, ensure sound and transparent practices in financial transactions, or protect virtual asset users, among other purposes (Article 7(10)).
   

5.

Notification of Measures against Former Officers and Employees
 

• The amendment further empowers the Commissioner of the KOFIU to notify the head of a financial company, etc. (including VASPs) of the details of any disciplinary or corrective measures that would have been imposed under Article 15(3) on any former (retired or resigned) officer or employee had such individual still been in office. The amendment requires the relevant head of the financial company, etc. to, upon receiving such notice, (i) inform the relevant former officer or employee of the contents of such notice, and (ii) keep records thereof (Articles 15-3(1) and 15-3(2)).