Crypto Journalist
Amin Ayan
Crypto Journalist
Amin Ayan
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South Korea is preparing one of its most aggressive crackdowns on cryptocurrency-related financial crime by expanding its travel rule requirements.
Key Takeaways:
- South Korea will extend its crypto Travel Rule to cover sub-$700 transactions, closing a loophole used to evade identity checks.
- Exchanges will be forced to apply full KYC to small transfers and face stricter financial and compliance reviews.
- High-risk offshore platforms will be blocked, and criminals barred from owning stakes in licensed crypto firms.
The new threshold covers transactions under 1 million won ($680), which until now allowed users to bypass identity checks by breaking transfers into smaller amounts, according to Yonhap News.
South Korea’s FSC Chief Vows Crypto AML Push With Expanded Travel Rule
Financial Services Commission (FSC) Chairman Lee Eok-won confirmed the plan Wednesday during a briefing to the National Assembly’s Legislation and Judiciary Committee, saying authorities would tighten oversight on crypto rails increasingly used for money laundering and tax evasion.
“We will crack down on crypto money laundering […] expanding the Travel Rule to transactions under 1 million won,” Lee said.
Currently, South Korea’s travel rule largely applies to higher-value transfers, requiring exchanges to collect and exchange identifying information about senders and recipients.
The new proposal would eliminate that loophole, forcing crypto platforms to apply the same disclosure standards to smaller transactions that were often used to evade reporting.
Once the change is implemented, exchanges operating in South Korea will be required to gather full identity data on crypto users even for low-value trades and transfers.
Regulators believe this will significantly reduce the use of digital assets for overseas remittances tied to illegal activities and unreported income.
The FSC also plans to introduce tougher restrictions on so-called “high-risk” offshore exchanges that facilitate transactions for Korean users without being licensed domestically.
According to the regulator, these platforms will be blocked outright if they are deemed to pose heightened risks of fraud or money laundering.
In addition, crypto exchanges will face more intense reviews of their financial stability.
The government plans to widen the criteria for Virtual Asset Service Provider (VASP) registration, evaluating whether platforms have adequate reserves, internal controls and compliance systems in place.
New rules will also bar individuals with prior convictions for tax crimes or drug offenses from becoming major shareholders in licensed crypto firms, a move aimed at preventing criminal networks from gaining influence over regulated platforms.
South Korea to Grant FIU Pre-Emptive Freezing Powers
The Financial Intelligence Unit (FIU) will also introduce pre-emptive account-freezing powers in serious cases, allowing investigators to lock suspicious accounts before funds can be moved beyond recovery.
Officials said legislative amendments are expected to be submitted to the National Assembly in the first half of 2026, with South Korea also expanding coordination with global regulators such as the Financial Action Task Force to align with international standards.
As reported, South Korea faces mounting concerns that its virtual asset taxation, scheduled to begin in January 2027, could face a fourth postponement due to persistent infrastructure gaps and unclear regulatory guidelines.
Despite five years since the tax law’s initial approval in 2020 and three previous delays, authorities have failed to establish critical systems for transaction monitoring, income classification, and cross-border enforcement.
