[2025 Audit] Financial Services Commission to Review Proactive Account Freezes Amid Criticism of "Delayed Response" to Cambodia

Amid revelations of large-scale virtual asset transfers between a Cambodian company under criminal suspicion and domestic virtual asset exchanges, criticism was raised during the comprehensive government audit that financial authorities have responded belatedly. The financial authorities responded that they would not only implement 'proactive account freezes' to confiscate illicit proceeds, but also improve the supervisory framework through the upcoming second-phase virtual asset legislation.

Lee Eokwon, Chairman of the Financial Services Commission, and Lee Chanjin, Governor of the Financial Supervisory Service, are listening attentively to lawmakers' questions during the comprehensive audit of the Financial Services Commission and the Financial Supervisory Service at the National Assembly's Political Affairs Committee held in Yeouido, Seoul on October 27, 2025. Photo by Kim Hyunmin

On October 27, Lee Eogwon, Chairman of the Financial Services Commission, addressed a question from Park Chandae, a lawmaker from the Democratic Party of Korea, during the National Assembly's Political Affairs Committee audit regarding the Prince Group of Cambodia, stating, "We will review improvements to the system, such as proactive account freezes, specifically targeting crimes like fraud, gambling, and drug offenses." The Prince Group has been identified as being backed by a Cambodian criminal organization.

In this context, Assemblyman Park pointed out, "The United States and the United Kingdom imposed international sanctions by filing lawsuits to confiscate virtual assets from Cambodia's Prince Group. In Korea, assets were frozen the following day, but this was an automatic freeze after international sanctions, which indicates that our financial authorities lacked an immediate cooperation system."

He further criticized, "On April 30 this year, Bithumb announced in advance that it would block deposits and withdrawals related to Huiyuan Group, and after the U.S. Treasury's announcement on May 1, the schedule for the block was moved up from May 9 to May 2. This means that domestic virtual asset exchanges carried out monitoring and preemptive measures that our government failed to do."

Assemblyman Park also insisted, "Financial authorities must constantly monitor the flow of funds of Cambodian criminal groups and form a task force to ensure cooperation between investigative agencies and financial institutions. Considering the seriousness of the current situation, I believe the response from the financial authorities has been rather slow."

In response, Chairman Lee said, "I agree that we must make every effort to protect the public," and added, "We will promptly designate restricted parties for financial transactions under the Act on Anti-Money Laundering in consultation with the Ministry of Foreign Affairs."

Lee Chanjin, Governor of the Financial Supervisory Service, also stated that the second-phase virtual asset legislation currently being prepared will include the introduction of an 'anti-money laundering (AML) system' and other institutional improvements. Regarding the supervisory framework for local subsidiaries of domestic banks, he admitted, "There is currently no direct supervisory system," and said, "We will swiftly prepare legislative improvements to address this gap and ensure immediate implementation in line with the government's announcement."

The scale of virtual asset inflows and outflows between Cambodia and domestic virtual asset exchanges has surged. According to Yangsoo Lee, a lawmaker from the People Power Party, from January to October this year, the total volume of virtual asset transfers between the five major domestic exchanges (Upbit, Bithumb, Coinone, Korbit, and GOPAX) and Cambodia's Huiyuan Guarantee exchange amounted to 3,146,980,000 KRW. Last year, the volume of such transactions was 12,806,340,000 KRW. This marks a 1,400-fold increase compared to the 9,220,000 KRW recorded in 2023.

Assemblyman Lee pointed out that the Prince Group is still conducting deposits and withdrawals, and criticized the financial authorities for their slow response. He said, "Both IX and the Prince Group have been sanctioned by the international community as money laundering channels, but there are records of inflows to Korea this year," adding, "We are essentially sitting idle." He emphasized, "These should have been blocked in advance, and it raises questions as to why it has come to this point. Measures must be taken to prevent recurrence."