South Korean Court Nullifies Upbit AML Suspension in FIU Case

TLDR

• The Seoul Administrative Court overturned the Financial Intelligence Unit’s (FIU) three-month partial suspension imposed on Dunamu, the operator of Upbit.
• The court determined that the anti-money laundering (AML) rules concerning transfers under 1 million won (approximately $675) were not sufficiently clear.
• Judges concluded that the FIU failed to provide specific guidance on the compliance steps Dunamu was required to implement.
• The court acknowledged that Dunamu had implemented its own compliance measures during the period under review.
• The judges ruled that the evidence did not establish willful misconduct or gross negligence on the part of Dunamu.

(SeaPRwire) –   Seoul’s Administrative Court has canceled a three-month partial suspension against Dunamu, the company that operates Upbit. This decision concludes a legal dispute that spanned over a year, with the court stating that the Financial Intelligence Unit (FIU) lacked clear justification for the sanction.

South Korea, Upbit Case Turns on Unclear AML Standards

The central issue in the case revolved around AML regulations for transactions valued at less than 1 million won, or $675. According to the court, the regulator had more defined standards for larger transactions.

Judges indicated that the FIU did not specify the necessary compliance actions with adequate precision. Dunamu had put its own measures in place, and the court did not find evidence of gross negligence.

The FIU had issued the suspension on February 25, 2025, following an on-site inspection. The agency cited Upbit’s handling of transactions with unregistered foreign virtual asset providers.

Furthermore, the FIU pointed to due diligence deficiencies during its review of Upbit’s operating license, alleging over 600,000 Know Your Customer (KYC) violations during that process.

Dunamu contested the order in court and sought an injunction to halt its enforcement. On February 28, the company confirmed that it had initiated legal proceedings.

Subsequently, on March 27, the court granted interim relief, allowing new user registrations to continue. This order remained in effect while the judges deliberated on the broader legal dispute.

In its final ruling, the court upheld its earlier decision and annulled the suspension. This judgment resolved the case, enabling Upbit to continue accepting new users.

Court Rejects FIU Case Against Dunamu

The judgment addressed the FIU’s primary assertion that Dunamu lacked adequate internal controls. However, the judges stated that the regulator had not provided specific compliance directives.

The court noted that Dunamu had taken independent actions to comply with existing rules. It also added that the benefit of hindsight alone was insufficient to prove a significant violation.

Judges differentiated between ambiguous standards and actionable misconduct. They concluded that the record did not demonstrate “willful misconduct or gross negligence” by Dunamu.

This finding undermined the FIU’s legal basis for imposing the penalty in this instance. The court’s focus was on the interpretation and application of the AML rules.

Yonhap reported on the ruling, stating that it brought an end to the dispute over the suspension. The report also detailed the case’s progression from inspection to injunction and finally to the final judgment.

The court’s reasoning was based on the clarity of the regulations, not on a determination that AML obligations were optional. Instead, the court indicated that the regulator needed to establish clearer standards before enforcing such a penalty.

Consequently, Upbit retained its capacity to onboard new users following both the injunction and the final judgment. The FIU had originally imposed the suspended measure on February 25, 2025.