Specific Financial Information Act

Simple explanation

Background: Koreans shorten this law to 특금법. For crypto users it is the law that decides which exchanges may operate, which ones may offer won trading, and why transfers abroad need sender and receiver details.

Its full name is the Act on Reporting and Using Specified Financial Transaction Information. It began as the law that makes banks and other financial firms report suspected money laundering and terrorist financing to the Korea Financial Intelligence Unit (FIU). An amendment of March 2020 (Act No. 17113), made to meet the standards of the Financial Action Task Force (FATF), added virtual asset service providers, and it took effect on March 25, 2021. A virtual asset service provider is any business that buys, sells or exchanges crypto, transfers, stores or manages it, or brokers deals in it, so exchanges and custody firms are covered.

The core change is registration. A provider may operate only after registering with the FIU; to register it needs ISMS (Information Security Management System) certification, and an exchange that handles won also needs a real-name verified deposit and withdrawal account arrangement with a bank. Disqualifications such as past penalties of its representative or executives under this act or other financial laws are checked too. Existing operators had until September 24, 2021. Essentially only Upbit, Bithumb, Coinone and Korbit (now Digital X) kept won markets then, and many exchanges without a bank arrangement switched to coin-only markets or shut down. A registration lasts three years from acceptance, a renewal must be filed at least 45 days before it expires, and the first renewal reviews began in the second half of 2024.

Registered providers carry ongoing duties: customer due diligence (KYC) on users' identity and purpose of trading, reporting suspicious transactions to the FIU, keeping each customer's records separately, and not dealing with unregistered providers. From August 2024 the FIU inspected Korea's won exchanges one after another; breaches of customer due diligence rules and dealings with unregistered overseas operators turned up at several of them, leading in 2025 to partial business suspensions and fines ranging from billions to tens of billions of won (millions to tens of millions of dollars). Some of these decisions are being fought in court.

The Travel Rule comes from this law as well. Since March 25, 2022, a provider sending ₩1,000,000 (about $700) or more in crypto to another provider must pass on sender and receiver details. That is why Korean exchanges allow withdrawals only to overseas exchanges they can exchange Travel Rule data with, and ask for address registration or identity checks for personal wallets. A decree amendment passed by the cabinet on August 11, 2026 drops the ₩1,000,000 threshold from February 20, 2027, so every transfer will be covered, and a receiving exchange that gets a deposit with missing details must ask the sender for them and reject it if they never come. Transfers with overseas providers rated low-risk stay allowed; other overseas providers and personal wallets will be allowed only when sender and receiver are the same person, and high-risk transfers are barred. For transfers of ₩10 million (about $7,100) or more, providers must run their own suspicious-transaction monitoring. The Financial Services Commission pointed to a "split transfer" case in which about ₩200 million (about $143,000) of Tether was withdrawn in 216 pieces, each under ₩1,000,000.

Registration got stricter too. An amendment to the act promulgated on February 19, 2026 took effect with a revised decree on August 20, 2026: besides the largest shareholder, major shareholders such as anyone who appoints the CEO or a majority of the board are now vetted, and a filing can be refused if a major shareholder has broken financial laws. New financial tests such as a debt ratio of 200% or less, and organization, staffing and IT requirements, were added, with a one-year grace period for existing providers.

The act also reaches overseas operators. A foreign operator that does business with Korean users must register, and the authorities judge that by whether it offers a Korean-language site, markets to Koreans or supports won payments. Operating without registration carries up to five years in prison or a fine of up to ₩50 million (about $36,000). The FIU identified 16 unregistered overseas operators in 2022 and 6 in 2023 and referred them to investigators, and at its request Google blocked new installs and updates in Korea of 17 operators' apps from March 25, 2025, and Apple did the same for 14 apps from April 11. Regulators tell users to check whether their exchange is registered and, if it is not, to consider withdrawing their assets.

The kimchi premium is part of the story. The act limits won markets to exchanges with a bank real-name account arrangement, and the Travel Rule makes moving coins in and out of Korea slower and more paperwork-heavy. Arbitrage that would close the gap between Korean and overseas prices therefore cannot happen fast or at scale, which is one reason the premium does not simply vanish. After the Travel Rule widens in February 2027, transfers to and from overseas exchanges and personal wallets may take longer or need more documents.

CoinGaja works out the premium from the won-market prices of Upbit, Bithumb, Coinone and Digital X. The deposit and withdrawal suspensions page shows the coin-by-coin wallet status of the four exchanges, and the Exchange notices page gathers their notices in one place. The FIU's website lists registered providers. This is general information, not legal advice; check the authorities' notices or a professional for your own case.

Example

※ Example numbers, for illustration only

See it on CoinGaja

• 📢 Exchange notices›
• 🚦 Deposit and withdrawal suspensions by exchange›
• 📊 Kimchi premium by coin›

Related terms