FIU, Coinone onsite inspection initiated…Entering final step for VASP renewal review

The Financial Intelligence Unit (FIU) has initiated an on-site inspection to check whether the cryptocurrency exchange Coinone is implementing Anti-Money Laundering (AML) measures. This inspection follows the Virtual Asset Service Provider (VASP) renewal application that Coinone submitted last October, and it is the last of the five major won-market exchanges.

According to the virtual asset industry, since the 21st, the FIU has been focusing on closely examining Coinone's internal control system related to AML under the Special Financial Information Act and the implementation of customer identification obligations. Priorly, Upbit, Korbit, Gopax, and Bithumb were subject to on-site inspections, and with Coinone's inclusion, all five major exchanges have entered the due diligence stage for the three-year renewal review.

However, the pace of review is slower than expected. The FIU investigated Upbit in August last year, Korbit in October, and Gopax in December, and only began examining Bithumb this March. To date, no exchange has received final approval for renewal. According to the FIU's operational manual, a decision on whether to accept the application should be made within three months of receipt, but in practice, reviews last more than six months due to the absence of a legal deadline.

The background for the review delay includes the discovery of violations of the Special Financial Information Act, such as breaches of customer identification obligations, during the Upbit inspection last year, combined with the elongated personnel vacancy in the responsible department. The FIU's virtual asset inspection division head was vacant for over a month until last month, and a successor was only appointed on the 9th of this month.

Within the industry, there is significant concern that the reviews for small exchanges may also be prolonged. One relation noted, “Even at Upbit, a legal violation was uncovered, so smaller places like Coinone may face even stricter standards,” indicating that the review schedule is unpredictable.

The uncertainty surrounding VASP renewals is directly constraining the business expansion of cryptocurrency companies. Another industry relation said, “If the renewal status is not confirmed, it is difficult to proceed with marketing or new business ventures, let alone overseas expansion.”

As such, criticism is being raised that the prolongation of the renewal review is acting as a barrier to investment and strategic planning across the entire virtual asset market, and attention is focused on when the FIU will be able to make a substantial approval decision.