Korbit faces $1.9 million AML fine after FIU inspection in South Korea

Korbit has also reduced its financial flows through the fines imposed by South Korea’s Financial Intelligence Unit after a comprehensive anti-money laundering audit was conducted. The shift signals a strengthening of regulatory restrictions on crypto exchanges domestically.

According to authorities, this case indicates that compliance controls have not been strong enough in the long term. It was resolved at the end of December. The supervisors interpret the measure as an extension of an enforcement campaign.

The Financial Intelligence Unit issued an institutional fine and warned Korbit for KRW 2.73 billion, or about $1.9 million. The conclusion was reached by the FIU Sanctions Review Committee on December 31, 2025. The officials also issued a warning to Korbit’s CEO. The stock exchange administrator was censured.

Korbit Audit Exposes Persistent AML Violations

The fines are linked to a visit to the branch between October 16 and 29, 2024. Researchers looked at Korbit’s systems for customer due diligence and transaction checks. They put an end to the communication, which several times violated the provisions of the Act on Specific Financial Information. To conduct the investigation, the regulator found that there were approximately 22,000 cases of non-compliance.

According to investigators, Korbit received the dubious or contradictory identification documents for verification purposes from clients. Even in cases with no address or with an incorrect address, there were still active accounts. Occasionally they failed to re-authenticate customers when regulatory thresholds were reached. These loopholes persisted even as changes occurred in risk indicators.

Also read: FSC targets the top Korean crypto exchanges with a 15-20% share cap

Cases with a high money laundering risk have also been identified at the FIU. In addition, the FIU found that the users whose risk increased were free to trade. Supervisors stated that they should have carried out additional checks. Certainly, this verification has not been carried out in some cases.

Another important finding was partial verification. For customers who failed the mandatory identity test, the number of transactions was approximately 9,100. According to South Korean rules, exchanges must be blocked until the verification procedure is completed. According to the FIU complaint, Korbit did not impose the restriction.

Korbit faces cross-border compliance violations

This situation increased concerns about cross-border activities. Inspections revealed a total of 19 transfers of virtual assets from three international crypto service providers. These companies are not incorporated in South Korea. Current laws do not allow domestic deals to be transacted with unreported international provisions.

The other type of violation under the law that the regulator identified involved 655 violations relating to risk testing. Korbit has not properly conducted a money laundering risk analysis before offering or promoting certain of its services. This product had transactional, non-fungible deals built into it. The FIU orders these tests to be carried out prior to the introduction of new products.

After reviewing the results, the FIU was prepared to look for financial and administrative alternatives. State officials claimed they would determine the final amount of the fines after a notice and comment period. The agency also added that other such inspections would continue in the crypto arena. The enforcement measures must also remain common.

The decision will be made when Korbit gains more attention in the market. Recently reports suggested that early communication took place between Bybit and Korbit’s management. The aim of the talks was to discuss a possible takeover. There will be no announcement of any agreement.

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