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,…
— Wu Blockchain (@WuBlockchain) November 28, 2025
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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