South Korea is implementing one of its most stringent Anti-Money Laundering (AML) measures by updating the crypto Travel Rule to include transactions below 1 million won ($680).

According to reports from Yonhap News, Eok-won Lee, the chairman of the Financial Services Commission (FSC), disclosed the plans during a session with the National Assembly’s Legislation and Judiciary Committee. The government aims to prevent money laundering that may exploit cryptocurrency transfers.

“We will crack down on crypto money laundering […] expanding the Travel Rule to transactions under 1 million won.”
“We will combat crypto money laundering […] by extending the Travel Rule to transfers below 1 million won.”

The regulation addresses a loophole that previously let users split transactions into smaller amounts to evade identity reporting requirements. Under the upcoming rules, exchanges must gather and share sender and receiver information for transfers below $680.

Targeting Drug Trafficking, Tax Evasion, and Overseas Schemes

The FSC stated that the new regulations are designed to curb the increasing usage of cryptocurrencies in tax evasion, drug trafficking, and other offshore payment strategies.

The adjusted Travel Rule will coincide with new limitations on “high-risk” offshore platforms, which pose an elevated risk of laundering and will be restricted from engaging with South Koreans.

Furthermore, exchanges will face more rigorous assessments of their financial conditions, broadening the requirements for Virtual Asset Service Provider (VASP) registration.

In addition, the government will prohibit individuals with criminal backgrounds involving drug or tax offenses from acquiring significant stakes in VASPs, aiming to avert criminal elements from holding key positions in licensed entities.

The Financial Intelligence Unit (FIU) is set to implement proactive account freezing capabilities for severe violations to prevent fund losses during investigations.

Officials plan to finalize the updated framework in early 2026 and present legislative changes to the National Assembly, while expanding collaboration with international organizations like the Financial Action Task Force.

This move represents the most extensive effort by South Korea to enhance AML regulations since the revision of the Special Financial Information Act in 2021.

Fighting Tax Evasion

This announcement comes on the heels of previous initiatives by South Korea to address tax evasion.

On October 19, a representative from the National Tax Service (NTS) indicated that the agency was prepared to conduct searches and confiscate digital wallets and devices if there was suspicion of residents hiding crypto assets to avoid taxes.

The NTS will scrutinize tax delinquent histories through crypto-tracking tools, and the suspected offenders will face such searches and seizures.