South Korea is set to tighten anti-money laundering (AML) regulations for cryptocurrency transactions, lowering the threshold under the Travel Rule to include transfers below 1 million won (~$680).

Closing the Gap on Small Transfers

The move addresses a loophole where users could split transfers into smaller amounts to avoid identity verification. Under the updated rule, crypto exchanges will now collect and share sender and receiver information even for smaller transactions, making it harder to use digital assets for illicit purposes.

Crackdown on High-Risk Offshore Exchanges

The Financial Services Commission (FSC) emphasized the growing risks of crypto being used for tax evasion, drug trafficking, and unauthorized overseas payments. High-risk offshore exchanges will be blocked from serving South Korean users, while domestic exchanges will face stricter financial reviews and expanded Virtual Asset Service Provider (VASP) registration criteria. Individuals with prior drug or tax convictions will be prohibited from holding major stakes in licensed crypto firms.

Strengthening International Cooperation

The Financial Intelligence Unit (FIU) will gain early account-freezing powers in serious cases to prevent the movement of suspicious funds. The government also plans to expand cooperation with global organizations, including the Financial Action Task Force (FATF), to align South Korea’s AML framework with international standards.

Officials aim to finalize the expanded regulations by the first half of 2026, with lawmakers reviewing the proposed legal changes in the interim.