South Korea’s financial watchdog is escalating its campaign against domestic cryptocurrency exchanges, preparing a new wave of sanctions for failures in anti-money laundering (AML) compliance. Financial authorities are expected to issue institutional and individual penalties, including fines, against major trading platforms that failed to meet their regulatory obligations.

A Systematic Inspection Process

The Korea Financial Intelligence Unit (FIU) is systematically processing cases based on the order of its on-site inspections. The unit has already examined the country’s largest exchanges—Upbit, Bithumb, Coinone, Korbit, and GOPAX—to verify compliance with rules like Know Your Customer (KYC) checks and suspicious transaction reporting. With most of the fieldwork complete, the cases are now undergoing legal review before sanctions are finalized.

Decisions are expected to follow the inspection timeline. The FIU first visited Upbit’s operator, Dunamu, in August of last year, followed by Korbit in October, GOPAX in December, Bithumb in March of this year, and Coinone in April. Bithumb’s case, however, might be delayed due to an additional review of its order book operations.

The Upbit Case Sets a Precedent

The actions taken against Dunamu are widely seen as a blueprint for the remaining exchanges. In February, the FIU issued a disciplinary warning to Dunamu’s chief executive and suspended Upbit from onboarding new customers for three months. On November 6, the agency followed up with a fine of 35.2 billion won for breaches of the Special Financial Transactions Act.

Industry participants anticipate similar findings for the other exchanges, as inspectors focused on the same set of AML controls across all platforms. Further sanctions and sizable monetary penalties are expected, with total fines potentially reaching hundreds of billions of won depending on the severity of the violations at each firm.

Broader Regulatory Pressure Continues

With four exchanges still awaiting decisions, the FIU’s process won’t be finished this year and will likely extend into the first half of 2024. This enforcement drive maintains regulatory pressure on the local industry as global crypto markets adjust to stricter oversight.

The crackdown is also happening amid renewed uncertainty over South Korea’s long-delayed crypto tax regime. Officials have warned that the country may not be ready to implement the tax by the planned January 2027 start date. At the same time, policymakers are signaling an openness to innovation, with the ruling Democratic Party recently launching a crypto policy task force to “foster growth” in digital assets.