Korbit Faces $1.9M AML Fine After South Korea FIU Inspection

Korbit has also reduced its financial flows through the South Korea Financial Intelligence Unit fines after a comprehensive audit of anti-money laundering was conducted. The shift suggests the strengthening of regulatory limitations on crypto exchanges based at home. 

According to authorities, the case suggests that compliance controls have not been strong enough in the long run. It was resolved towards the end of December. The regulators construed the move to be an expansion of an enforcement campaign.

The Financial Intelligence Unit issued an institutional fine and warned Korbit of KRW 2.73 billion, or about $1.9 million. On December 31, 2025, the conclusion was made by the FIU Sanctions Review Committee. The officials also issued a warning to the chief executive of Korbit. The administrator of the exchange was censured.

Korbit Audit Exposes Persistent AML Violations

The penalties are pegged on a visit to the facility made between 16th and 29th October 2024. Investigators looked at Korbit’s systems of customer due diligence and transaction controls. They took an end of communication, which had gone against the provisions of the Specific Financial Information Act several times. To conduct the review, the regulator found out that there were about 22,000 compliance failures.

According to investigators, Korbit received the dubious or conflicting identification papers for verification of clients. Even in cases without an address or with an incorrect address, there were still active accounts. They occasionally neglected to reauthenticate clients when legal thresholds were reached. These loopholes continued to exist even when there were changes in risk indicators.

Also Read: FSC Targets Top Korean Crypto Exchanges with 15–20% Share Cap

The high money laundering risk cases were also identified in the FIU. Additionally, the FIU observed that the users whose risk was increasing were free to trade. Regulators stated that they should have conducted additional checks. Certainly, this verification was not done on some occasions.

Another important finding was partial verification. In the case of customers who had failed the mandatory identity test, the volume of transactions was about 9,100. According to the South Korean rules, exchanges are to be blocked until the verification procedure is completed. According to the complaint by the FIU, Korbit did not impose the restriction.

Korbit Faces Cross-Border Compliance Breaches

This situation heightened concerns about cross-border activities. Inspections revealed a total of 19 virtual asset transfers from three international crypto service suppliers. These companies were not incorporated in South Korea. The current laws do not allow domestic deals to transact with unreported international amenities.

The other type of violation according to the law that the regulator identified was 655 violations relating to risk tests. Korbit did not properly perform the risk analysis of money laundering before offering or in favor of certain of its services. This product had transaction-related non-fungible deals built in. The FIU mandates the performance of these tests prior to the introduction of new products.

After looking at the results, the FIU was willing to seek financial and administrative alternatives. The government officials asserted that they would set the final amount of the penalties after a notice and comment period. The agency also added that other such inspections would continue in the crypto arena. The enforcement measures should also remain common.

The decision is made when Korbit gains more attention in the market. Recent reports suggested that there was early-stage communication between Bybit and the management at Korbit. The talks aimed to discuss a potential acquisition. No announcement of any agreement takes place.

Also Read: Bybit-Korbit Deal Signals Rising Foreign Crypto Activity in South Korea