Korea’s Financial Intelligence Unit Sets 2026 Anti-Money Laundering Priorities

Key Takeaways

• Freezing Criminal Funds, Faster: KoFIU wants the authority to freeze accounts tied to serious livelihood crimes without waiting for court orders, aiming to cut off criminal proceeds before they disappear.
• Cross-Border Crime Moves to Center Stage: International criminal groups would be added to prohibited transaction lists, alongside deeper coordination with foreign counterparts and FATF-led initiatives.
• Crypto Oversight Tightens Again: The travel rule would extend to lower-value transactions, with closer scrutiny of transfers involving personal wallets and overseas exchanges.
• AML Accountability Shifts Upward: Financial institutions would need to place clear AML responsibility on a senior executive, backed by mandatory evaluations and clearer consequences for failures.
• Global Standards Loom Large: With a FATF review on the horizon, KoFIU is moving to close long-standing gaps, including beneficial ownership transparency and AML rules for legal and accounting professionals.

Deep Dive

South Korea’s financial intelligence authority is preparing for a significant expansion of its anti-money laundering and counter-terrorist financing regime, as it confronts a sharp rise in cross-border crime, increasingly sophisticated scams, and fast-moving risks tied to virtual assets.

At a policy advisory committee meeting on February 5, the Korea Financial Intelligence Unit (KoFIU) unveiled its AML/CFT policy agenda for 2026, marking 25 years since the country’s AML framework was first introduced. Commissioner Lee Hyung Ju said the milestone comes at a moment when the system’s original design is showing strain under the weight of modern financial crime.

While suspicious transaction reporting and analytical outputs have grown substantially over the past two decades, Lee warned that regulatory tools, staffing levels, and technical infrastructure have not kept pace with the scale and complexity of emerging threats, particularly those involving transnational networks and virtual assets.

Moving Faster to Stop Criminal Proceeds

A central theme of the 2026 agenda is speed, specifically the ability to disrupt criminal proceeds before they move beyond reach.

Under Korea’s current framework, financial accounts suspected of holding criminal proceeds generally cannot be frozen without a court decision, except in limited cases such as voice phishing scams. KoFIU plans to seek changes to the law that would allow account freezes at the request of investigative authorities in serious cases involving narcotics, illegal gambling, and terrorism financing.

The authority is also looking to widen the net when it comes to prohibited financial actors. International criminal organizations would be added to the list of entities subject to transaction bans, which currently focuses on terrorism and weapons proliferation.

Internally, KoFIU plans to strengthen its analytical backbone. A permanent strategic analysis team will be established, supported by AI-based screening tools and enhanced virtual asset analysis capabilities, including the use of Chainalysis. The goal is to extract more actionable intelligence from the growing volume of suspicious transaction reports.

International coordination will also be stepped up, with country-specific contact points and deeper regional cooperation aimed at tackling transborder crime more effectively. KoFIU said it will take a more active role in projects led by the Financial Action Task Force (FATF), particularly within the Asia-Pacific region.

Tightening the Screws on Virtual Assets

Virtual assets remain a major focus of the 2026 agenda, reflecting concerns that the sector continues to present elevated money laundering risks.

KoFIU plans to extend the application of the travel rule to transactions below $684.53 (KRW 1 million) and impose recordkeeping obligations on recipient exchanges, not just originating platforms. Transfers involving personal wallets or overseas exchanges would be limited to lower-risk scenarios where the sender and recipient are the same entity.

The authority is also preparing for the arrival of stablecoin regulation. Under KoFIU’s plans, stablecoin issuers would be subject to AML requirements equivalent to those imposed on traditional financial institutions, with additional safeguards applied using a risk-based approach.

Acknowledging that many virtual asset service providers operate on a small scale, KoFIU said it will increase examinations of smaller firms, push for management improvements where weaknesses are identified, and apply strict sanctions in cases of serious non-compliance.

Putting Accountability Back at the Top

Beyond crypto, KoFIU is also aiming to strengthen AML governance across the broader financial sector.

Proposed reforms would require financial institutions to designate a senior executive with explicit responsibility for AML compliance, reinforcing accountability at the top of the organization. The authority also plans to consolidate scattered AML rules into a clearer regulatory framework, with more transparent sanction standards.

Voluntary semi-annual AML evaluations would become mandatory, and KoFIU is seeking the authority to sanction institutions that submit false information or fail to report altogether.

Supervisory practices are set to evolve as well. High-risk institutions will face more intensive inspections, while lower-risk violations may be addressed initially through corrective action recommendations, with penalties escalating if firms fail to follow through.

Closing the Gap With Global Standards

KoFIU’s 2026 agenda also reflects pressure to close long-standing gaps with international AML standards.

One priority is preventing the misuse of shell companies. KoFIU plans to build a database of ultimate beneficial owners using suspicious transaction data, allowing information to be cross-checked by companies, financial institutions, and investigative authorities.

The authority also plans to introduce AML obligations for attorneys, certified public accountants, and tax accountants, an area where Korea remains an outlier among FATF member states. Consultations with professional groups are expected to focus on customer due diligence and suspicious transaction reporting requirements.

KoFIU will form a joint government task force to prepare for Korea’s next FATF mutual evaluation, scheduled for March 2028. The group will focus on identifying regulatory gaps and aligning domestic reforms with international expectations.

KoFIU said measures that do not require legislative changes will be implemented immediately. Proposed amendments to existing laws are expected to be submitted to the National Assembly in the first half of the year, alongside rapid updates to subordinate regulations.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.