Voice Phishing Relief Procedures Will Be Applied To Virtual Asset Exchanges in Korea

The Financial Services Commission (“FSC”) announced on the 28^th of last month that it prepared measures against voice phishing done through virtual asset exchanges and prepaid businesses that previously could not suspend payments even if such crime was reported.

In order to relieve damages from voice phishing utilizing virtual assets, which has recently been on the rise, the Special Act on the Prevention of Loss Caused by Telecommunications-based Financial Fraud and Refund for Loss (“Voice Phishing Act”) will be applied to virtual asset service providers and virtual assets. A period to withdraw, also known as a “cooling-off period,” will also be introduced to delay the liquidation of virtual assets acquired through illegal activities such as voice phishing.

In the case of voice phishing damage, the virtual asset exchange will apply the same damage relief procedure as that of financial companies to protect the victims. The amendment to the Voice Phishing Act will be enacted in April so that the virtual asset exchange can immediately suspend the fraud’s account and proceed with the victim relief procedure if the victim’s funds are converted to virtual assets.

Moreover, to effectively respond to the liquidation of virtual assets, identity verification will be strengthened, and the same cooling-off period will be introduced when transferring virtual assets to overseas exchanges or e-wallets created by individuals. The cooling-off period will be instated next year as the virtual asset exchanges will need time to implement it into their systems.

It will also be made possible, through legislation, to share account information related to voice phishing between financial companies and convenient remittance service providers to promote quick relief from damages caused by fraudulent phone calls that utilized convenient remittance services. Prepaid businesses will be obliged to provide financial transaction information to financial companies when reporting the phone scam, enabling prompt payment suspension of the final receiving account. Further damages will be prevented by sharing information between financial companies and remittance service providers on abnormal transactions identified through the fraud detection system (FDS).

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