South Korea’s FIU Hits Dunamu with ₩35.2 Billion Fine Over AML Failures

South Korea’s Financial Intelligence Unit (FIU) has imposed a record ₩35.2 billion fine—about $26 million—on Dunamu Inc., the operator of cryptocurrency exchange Upbit, for what regulators described as systemic failures in anti-money laundering (AML) compliance. The penalty, announced Thursday, follows months of investigation and multiple disciplinary hearings, marking one of the most severe enforcement actions ever taken against a domestic virtual asset service provider.

According to the FIU, Dunamu violated several provisions of the nation’s Specific Financial Information Act, which governs anti-money laundering standards for financial institutions and crypto businesses. The violations include improper customer verification, failure to restrict trading for unverified accounts, and non-reporting of suspicious transactions. The regulator said the decision came after four rounds of disciplinary deliberations and two issue review sessions that examined the scope, motive, and impact of the breaches before determining the final penalty.

The latest action comes after a separate sanction earlier this year, when the FIU ordered a three-month partial business suspension and executive discipline against Dunamu for conducting transactions with an unregistered virtual asset operator. The new fine broadens the scope of regulatory scrutiny, underscoring Seoul’s intention to tighten compliance oversight in the digital asset sector.

The FIU’s on-site inspections, conducted between August and October 2024, revealed approximately 8.6 million instances of violations. Regulators said Dunamu had accepted unclear or altered identification documents, approved customer verification using copies or photographs instead of original IDs, and allowed transactions to continue despite incomplete identity checks. In some cases, users’ addresses were either left blank or entered incorrectly, while others continued to trade even after their risk ratings were raised due to potential money laundering concerns.

Investigators also found 15 instances in which Dunamu failed to report suspicious transactions that were tied to ongoing criminal investigations. Under Korean law, virtual asset operators are required to immediately report any transaction that raises reasonable suspicion of money laundering or other illicit activity. The FIU said the company’s failure to meet these obligations demonstrated “a serious breakdown in internal compliance control.”

Dunamu has been given more than ten days to submit its formal opinion before the fine amount is finalized. Once confirmed, the details of the sanction will be published on the FIU’s website. The agency emphasized that strong enforcement is necessary to safeguard the integrity of the nation’s financial system and maintain trust in the expanding digital asset market. It warned that similar lapses by other exchanges will result in “strict and consistent” penalties.

The case represents a turning point for Korea’s crypto regulation landscape, which has tightened rapidly following a series of scandals and market disruptions in recent years. Analysts say the FIU’s decision sends a clear message that compliance failures—especially those linked to AML obligations—will no longer be treated as administrative oversights but as critical threats to financial stability.

For Dunamu, which dominates the domestic exchange market through Upbit, the fine is a sharp reminder that operational scale brings equally large compliance risks. Industry observers expect the company to strengthen its internal monitoring and KYC processes, while rival exchanges are likely to initiate preemptive compliance reviews to avoid similar sanctions.

The FIU said it will continue to inspect and monitor virtual asset service providers to ensure adherence to AML regulations and promised “strict action” for any future violations. As the cryptocurrency sector continues to grow in both scale and systemic importance, regulators appear determined to treat crypto compliance with the same gravity as that of the traditional banking sector.