South Korea to extend crypto travel rule to transactions under $700 amid AML crackdown

South Korea is preparing one of its most aggressive crackdowns on cryptocurrency-related financial crime by expanding its travel rule requirements.

The new threshold covers transactions below 1 million won ($680), which until now allowed users to bypass identity checks by splitting transfers into smaller amounts, according to Yonhap News.

South Korea’s FSC chief vows to push crypto AML with expanded travel rule

Financial Services Commission (FSC) Chairman Lee Eok-won confirmed the plan on Wednesday during a briefing to the National Assembly’s Legislative and Judiciary Committee, saying authorities would step up oversight of crypto rails increasingly used for money laundering and tax evasion.

“We will combat crypto money laundering… by expanding the travel rule to transactions below 1 million won,” Lee said.

Currently, South Korea’s travel rule applies largely to higher value transfers, requiring exchanges to collect and exchange identifying information about senders and recipients.

The new proposal would close this loophole, requiring 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 collect full identity data on crypto users, even for low-value transactions and transfers.

Regulators believe this will significantly reduce the use of digital assets for overseas remittances linked to illegal activities and undeclared income.

The FSC also plans to introduce tighter restrictions on so-called “high-risk” offshore exchanges that facilitate transactions for Korean users without a national license.

According to the regulator, these platforms will be purely and simply blocked if they are deemed to present increased risks of fraud or money laundering.

Additionally, crypto exchanges will be subject to greater scrutiny of their financial stability.

The government plans to expand the registration criteria for virtual asset service providers (VASPs), assessing whether platforms have adequate reserves, internal controls and compliance systems in place.

New rules will also prohibit people with previous convictions for tax or drug offenses from becoming major shareholders in licensed crypto companies, 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 preventative powers to freeze accounts in serious cases, allowing investigators to lock suspicious accounts before funds can be transferred 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 is increasingly concerned that taxation of virtual assets, scheduled to begin in January 2027, could face a fourth delay due to persistent infrastructure gaps and unclear regulatory guidelines.

Despite five years since the tax law was initially approved in 2020 and three previous delays, authorities have failed to put in place critical systems for transaction tracking, income classification and cross-border enforcement.

The article South Korea to extend crypto travel rule to transactions under $700 amid AML crackdown appeared first on Cryptonews.

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