South Korea Ends 1 Million Won Crypto Travel Rule Threshold in Major AML Crackdown
Key Takeaways
- •South Korea's Cabinet approved amendments on August 11 that remove the 1 million won threshold, requiring virtual asset service providers to transmit sender and recipient information for all crypto transfers between registered platforms regardless of amount.
- •Platforms must request missing transaction details and may refuse transfers that cannot be verified, a change the Financial Intelligence Unit said closes a loophole that let users split large transactions into smaller amounts.
- •The amendments introduce risk-based requirements for transfers involving overseas exchanges and self-hosted wallets, and VASPs handling transfers of 10 million won or more to those destinations must operate separate systems for suspicious transaction handling.
- •New VASP registration standards take effect August 20, 2026 and require a debt-to-equity ratio of no more than 200%, with existing VASPs granted a one-year transition period to meet the new requirements.
- •A Financial Services Commission survey counted about 15.6 million virtual asset investors in South Korea at the end of 2024.
South Korea is tightening anti-money laundering rules for crypto transactions after the Cabinet approved amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information on August 11.
The changes affect both domestic crypto platforms and transfers involving external wallets and overseas exchanges. They arrive in one of the world's most active retail crypto markets — a Financial Services Commission survey counted about 15.6 million virtual asset investors at the end of 2024 — and extend a rulebook that already includes the Virtual Asset User Protection Act, which has imposed investor-protection duties on local exchanges since July 2024.
Crypto Travel Rule Will Apply to All Transfers
The most significant change is the removal of the current 1 million won threshold for the Travel Rule.
The Travel Rule is a global standard set by the Financial Action Task Force that requires virtual asset service providers to pass on sender and recipient details when funds move between platforms. FATF guidance allows countries to set a de minimis threshold of $1,000 when technical limits prevent attaching data to every transfer; South Korea applied a 1 million won cutoff when it began enforcing the rule for crypto in March 2022.
Under the revised rules, virtual asset service providers, or VASPs, must provide required sender and recipient information for all crypto transactions between registered platforms, regardless of amount.
If transaction information is missing, platforms will be required to request the missing details and may refuse to accept the transfer if the information cannot be verified. The Financial Intelligence Unit, the anti-money laundering bureau that registers and supervises VASPs under the FSC, said the update is intended to close a loophole that allowed users to split large transactions into smaller ones.
South Korea Cites Split Transfer Case
The Financial Services Commission cited one case involving about 200 million won sent to a crypto exchange and then used to purchase USDT. The assets were later withdrawn in 216 transactions, each below the former 1 million won threshold.
Regulators said the repeated sub-threshold withdrawals may have been intended to evade transaction monitoring. The new rules are designed to make such behavior harder.
New Controls on Overseas Exchanges and Personal Wallets
The update also introduces risk-based requirements for transfers involving foreign exchanges and self-hosted wallets.
Transfers to lower-risk overseas exchanges may still be possible, while service providers will announce the conditions for other foreign exchanges and personal wallets. Transactions involving high-risk counterparties may be blocked. Foreign platforms must register with the FIU to legally serve Korean users, and Korean authorities have previously blocked local access to the apps of unregistered offshore exchanges.
Registered VASPs handling transfers of 10 million won or more to personal wallets or overseas exchanges will also be required to operate separate systems for suspicious transaction handling.
The FSC said existing anti-money laundering measures for overseas platforms and personal wallets have been limited, and the new rules are meant to address those gaps.
Registration Standards for Crypto Firms Are Tightened
The amendments also raise the bar for crypto businesses seeking registration, building on the country's 2021 registration round, which left the won-based market concentrated among a small number of large platforms.
VASPs will face stricter review of their financial condition, management, workforce, IT systems, security measures, and internal controls. To qualify, a VASP must maintain a debt-to-equity ratio of no more than 200%, avoid serious financial or criminal problems, and demonstrate systems that can support the stable operation of crypto services.
The new VASP registration provisions and related rules on sanctions for former employees will take effect on August 20, 2026. Existing VASPs will be granted a one-year transition period for the new financial, personnel, infrastructure, and internal control standards.
The new crypto transfer AML guidelines will be enforced in the middle of the year following their promulgation.
