South Korea’s Cabinet on Aug. 11 approved amendments to the enforcement decree of the Act on Reporting and Using Specified Financial Transaction Information, expanding the crypto Travel Rule from transfers above 1 million won, or about $700, to all amounts. The revised framework will apply to transfers between all registered virtual asset service providers, or VASPs.
According to MSN Finance, the biggest change is the removal of the existing threshold. Under the current rule, only transfers above 1 million won require the exchange of sender and recipient identification data. South Korea’s Financial Intelligence Unit said that setup left a clear opening for evasion.
Threshold removal targets split-transfer evasion
Business Insider reported that authorities disclosed one representative case in which a user deposited about 200 million won, or roughly $140,000, at a crypto exchange, bought Tether (USDT), and then withdrew the funds in 216 transactions, each kept below 1 million won. That structure allowed the user to avoid the Travel Rule’s information-sharing requirement.
Under the amendment, the receiving platform must obtain complete information on both the sender and the recipient regardless of transaction size. If the data is incomplete, the platform may request additional documents or reject the transfer outright.
Overseas exchanges and personal wallets face risk-based controls
The amendment also strengthens transfer controls involving overseas crypto exchanges and personal wallets. Registered domestic VASPs will have to decide whether to allow a transfer based on the counterparty’s risk level.
- Transfers to overseas exchanges classified as low risk will be allowed.
- Transfers involving other foreign exchanges or personal wallets will generally be limited to cases where the sender and recipient are the same person.
- Transfers involving counterparties assessed as high risk will be prohibited.
In addition, crypto platforms must establish a separate suspicious transaction monitoring system for transfers of 10 million won, or about $7,000, or more when those transfers involve overseas exchanges or personal wallets.
South Korean regulators said suspected money laundering cases routed through overseas exchanges and personal wallets have increased as loopholes in the existing anti-money laundering framework were exploited.
VASP registration standards are also being raised
The enforcement decree also tightens VASP registration requirements. The revised standards cover financial soundness, internal control systems, staffing requirements, infrastructure standards, and a broader scope of review for major shareholders.
The VASP registration provisions will take effect on Aug. 20. Existing operators will receive a one-year grace period to meet the new requirements covering finance, staffing, infrastructure, and internal controls.
Effective date set for six months after promulgation
The expanded Travel Rule and other transfer-related AML requirements will take effect six months after the decree is promulgated. Based on the timeline cited in the report, South Korea’s crypto transfer regime is expected to move to a zero-threshold information-sharing system by the end of February 2026.
Immediate effects center on compliance and cross-border transfers
As described in the report, applying the Travel Rule to every transfer means VASPs will need to exchange identity data on each transaction, increasing both compliance costs and technical workload. For smaller users, transfers that previously fell below the roughly $700 threshold could now face document requests or delays.
The risk-tiered treatment of overseas exchanges and personal wallets is also set to tighten how South Korean users handle on-chain and cross-border transfers. The report noted that users in the country have often relied on foreign exchanges or decentralized wallets to get around domestic restrictions, and the new rules raise the compliance risk of that approach.
The article also said the amendment is aligned with the direction of the Financial Action Task Force, or FATF, Travel Rule. For international VASPs seeking entry into South Korea, compliance with CODE, short for Crypto Overseas Exchange Directory, and AML coordination with local partners will be necessary.