South Korea Intensifies Crypto Regulations to Combat Money Laundering
South Korea is taking significant steps to strengthen its cryptocurrency regulations, aiming to prevent money laundering and other financial crimes. The country’s Financial Services Commission (FSC) has announced plans to expand its crypto travel rule to include transactions under $700, effectively closing a loophole that allowed users to bypass identity checks by breaking transfers into smaller amounts.
Key Measures to Enhance Regulatory Oversight
The FSC’s plan includes several key measures to enhance regulatory oversight and prevent illicit activities. These measures include:
- Expanding the crypto travel rule to cover transactions under 1 million won ($680), which will require exchanges to collect and exchange identifying information about senders and recipients.
- Forcing exchanges to apply the full Know-Your-Customer (KYC) method for small transfers and undergo more stringent financial and compliance checks.
- Blocking high-risk offshore platforms that allow transactions for Korean users without being licensed domestically.
Strengthening Anti-Money Laundering Efforts
South Korea’s FSC Chairman, Lee Eok-won, emphasized the need to take action against crypto money laundering and announced plans to extend the travel rule to transactions under 1 million won. The new proposal aims to eliminate the loophole that allowed users to bypass identity checks and force crypto platforms to apply the same disclosure standards to smaller transactions.
Regulators expect this move to significantly reduce the use of digital assets for foreign remittances linked to illegal activities and unreported income. The FSC also plans to impose stricter restrictions on high-risk offshore exchanges and expand the criteria for registering virtual asset service providers (VASP).
Granting Preemptive Freezing Powers
The Financial Intelligence Unit (FIU) will introduce preventive account freezing powers in serious cases, allowing investigators to block suspicious accounts before funds can be irrevocably moved. Legislative changes are expected to be submitted to the National Assembly in the first half of 2026, with South Korea also expected to expand coordination with global regulators to align with international standards.
For more information, visit https://cryptonews.com/news/south-korea-to-extend-crypto-travel-rule-to-sub-700-transactions-in-aml-clampdown/
