South Korea is tightening its anti-money laundering framework for cryptocurrencies by removing the 1 million won (about $700) threshold for Travel Rule information-sharing requirements. The Cabinet approved amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information on Tuesday, extending the rule to all transfers between registered virtual asset service providers (VASPs), regardless of transaction value.
What changes under the expanded Travel Rule
Previously, only transfers exceeding 1 million won triggered mandatory Travel Rule compliance, requiring VASPs to share sender and recipient information. The new decree eliminates that floor, meaning even the smallest transfer between registered crypto platforms will now require the exchange of identifying details.
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Receiving platforms are also obligated to obtain sender and recipient information and may request missing data or reject transactions when required information is unavailable. The Financial Intelligence Unit (FIU) said the threshold removal is designed to prevent users from circumventing the rule by splitting larger transfers into smaller amounts.
The FIU cited a case in which a user bought Tether USDt (USDT) after depositing about 200 million won into a crypto exchange and then made 216 withdrawals, each worth less than 1 million won — a pattern that would have avoided triggering the previous threshold.
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New AML rules for overseas exchanges and personal wallets
The amendments also introduce fresh Anti-Money Laundering requirements for transfers involving overseas crypto exchanges and personal wallets. Registered local VASPs will be required to assess the risk posed by counterparties and determine which transfers they allow.
Transfers to low-risk overseas exchanges will be permitted, while transfers involving other foreign exchanges and personal wallets will generally be allowed when the sender and recipient are the same person. However, transactions involving counterparties deemed high risk will be prohibited.
Crypto platforms will also need to establish their own suspicious transaction monitoring systems for transfers worth at least 10 million won involving foreign exchanges or personal wallets. South Korean authorities said suspected money laundering involving these channels has increased as gaps in existing AML rules have been exploited.
Broader registration and compliance standards
The decree strengthens registration requirements for crypto service providers, including financial health, internal controls, staffing and infrastructure standards, while expanding scrutiny of major shareholders. The VASP registration provisions will take effect on Aug. 20, though existing providers will have an additional year to comply with some financial, staffing, infrastructure and internal control requirements.
The expanded Travel Rule and other transfer-related AML requirements will take effect six months after the decree is promulgated.
Why this matters
South Korea has one of the most active cryptocurrency markets in the world, and its regulatory moves are closely watched by global exchanges and policymakers. By removing the threshold, authorities are closing a loophole that allowed small, repeated transfers to bypass scrutiny — a tactic often associated with money laundering and other illicit financial activity.
The move also aligns South Korea more closely with international standards set by the Financial Action Task Force (FATF), which has long recommended Travel Rule compliance for all virtual asset transfers. For users, the new rules mean more stringent identity checks and potential delays for transactions involving foreign platforms or personal wallets, especially those flagged as high risk.
Conclusion
South Korea’s decision to eliminate the Travel Rule threshold represents a significant tightening of its crypto AML regime. The changes, which take effect in stages, will require all registered VASPs to share transfer information and adopt more strong monitoring systems. While the full impact on users and exchanges will unfold over the coming months, the direction is clear: regulators are prioritizing transparency and compliance over convenience in the digital asset space.
FAQs
Q1: What is the Travel Rule in crypto?
The Travel Rule is an AML requirement that obliges financial institutions, including crypto service providers, to share certain information about the sender and recipient of a transaction. It is designed to prevent money laundering and other illicit activities by ensuring that transfers are traceable.
Q2: When will the new Travel Rule requirements take effect in South Korea?
The expanded Travel Rule and other transfer-related AML requirements will take effect six months after the decree is promulgated. The VASP registration provisions will take effect on Aug. 20, with existing providers given an additional year to comply with some requirements.
Q3: How will this affect users sending crypto to personal wallets?
Transfers involving personal wallets will generally be allowed when the sender and recipient are the same person. However, transactions involving counterparties deemed high risk will be prohibited, and platforms will need to monitor transfers worth at least 10 million won involving foreign exchanges or personal wallets for suspicious activity.
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