South Korea is preparing to expand its anti-money laundering rules for cryptocurrency transactions. The government will extend the crypto Travel Rule to cover transfers below 1 million won, or about $680.
The move follows the adoption of the Virtual Asset Users Protection Act, which took effect in July last year. The law bans insider trading, market manipulation, and illegal trading of virtual assets. It also gives regulators broader powers to inspect exchanges and enforce penalties for violations.
Smaller Crypto Transfers Now Under Scrutiny
Financial Services Commission Chairman Lee Eok-won told the National Assembly’s Legislation and Judiciary Committee that the government will act against illegal financial activity involving crypto. “We will crack down on crypto money laundering expanding the Travel Rule to transactions under 1 million won,” he said.
Under the current threshold, users can split transfers into smaller amounts to avoid identity checks. The new rule will remove this gap. Crypto exchanges will have to collect and share sender and receiver information for smaller transfers.
High-Risk Offshore Exchanges Will Be Blocked
The FSC said the rule targets growing use of crypto for tax evasion, drug trafficking, and overseas payment schemes. It will be implemented alongside stricter controls on “high-risk” offshore exchanges, which will be blocked from serving South Korean users.
South Korea plans a major AML overhaul, expanding the Travel Rule to all crypto transfers, including those under 1 million KRW, to stop “smurfing” via small transactions. Regulators will also block high-risk overseas platforms, tighten financial requirements for local exchanges,…
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Exchanges will undergo stronger financial reviews. The criteria for Virtual Asset Service Provider (VASP) registration will be widened. People with records of drug or tax crimes will be barred from becoming major shareholders in licensed crypto firms.
South Korea Expands International AML Cooperation
The Financial Intelligence Unit will gain early account-freezing powers in serious cases to prevent funds from being moved during investigations.
Officials aim to finalize the framework in the first half of 2026. Lawmakers will review the proposed legal changes. The government will also expand cooperation with international bodies, including the Financial Action Task Force.
This article was written by Tareq Sikder at www.financemagnates.com.
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