Woofun AI reports that South Korean lawmakers have introduced legislation to significantly expand the Financial Intelligence Unit's (FIU) mandate regarding unregistered crypto businesses. Spearheaded by People Power Party lawmaker Eom Tae-young and nine colleagues, the bill seeks to amend the Act on Reporting and Using Specified Financial Transaction Information, shifting the regulatory burden from passive monitoring to active enforcement.

Structurally, the proposal empowers the public to report suspected violations directly to the FIU, which would then gain the authority to investigate, analyze, and file complaints with relevant authorities. The agency could also request criminal investigations or provide intelligence to investigators, a mechanism currently pending approval at the National Assembly's introduction stage.

The deeper driver is a documented failure in the current system, where the FIU identifies suspects but relies on police for action. Per Woofun AI, data from Yonhap reveals that between August 2022 and August 2025, police suspended investigations or preliminary inquiries into 23 of 25 unregistered virtual asset service providers referred by the FIU, most of whom were based overseas.

Under existing rules, crypto firms serving South Korean customers must register with the FIU, a requirement reflected in June statistics showing 28 registered providers. With 40 suspected illegal operators already referred to investigative authorities, the legislative push signals a critical shift toward closing the enforcement loop for offshore entities.