South Korean prosecutor proposes FIU-led crypto freeze under anti-money laundering law

A proposal has been raised to let South Korea’s Financial Intelligence Unit freeze assets held on domestic exchanges for up to six months at an early stage when criminal proceeds are converted into virtual assets, Digital Asset reported. Kim Byung-jin, a prosecutor at the Seoul Central District Prosecutors’ Office, outlined the measure in a paper titled “Criminal Proceeds Converted Into Digital Assets and Ways to Introduce an Early Freeze System,” published in the Supreme Prosecutors’ Office journal New Trends in Criminal Law. The paper proposed adding an FIU-led early freeze system for digital assets to the Act on Reporting and Use of Certain Financial Transaction Information. Under the proposal, the process would follow a structure of an investigative agency request, an FIU review, and a freeze by a virtual asset service provider. If an investigative agency requests a freeze based on a specific case and supporting materials, the FIU would separately review whether there are reasonable grounds to determine the digital assets are linked to criminal proceeds or other illicit property and whether a freeze is needed to prevent transfer or concealment. If the FIU recognizes those conditions, South Korean virtual asset service providers would be asked to restrict withdrawals, transfers, or disposal of the assets.