South Korea Plans AML Crackdown on Sub-$680 Crypto Transfers
South Korea is preparing to tighten Anti-Money Laundering (AML) oversight by extending its crypto Travel Rule to transactions below 1 million won ($680), according to a Yonhap News report. Financial Services Commission (FSC) Chairman Lee Eok-won outlined the plan before the National Assembly’s Legislation and Judiciary Committee on Wednesday, stating authorities would target money laundering involving digital assets.
The measure is intended to close a loophole that allowed users to split transfers to avoid identity reporting. Under the proposal, exchanges would be required to collect and share sender and recipient information for crypto transfers under $680.
Measures aimed at curbing drug trafficking, tax evasion and overseas schemes
The FSC said the expanded rule is designed to address rising use of crypto channels for tax evasion, drug trafficking and overseas payment schemes. The overhaul will also introduce restrictions on “high-risk” offshore platforms deemed to pose elevated money laundering risks, which would be barred from servicing South Korean users.
Exchanges will face stricter financial soundness assessments, with broader criteria applied to virtual asset service provider (VASP) registrations. The government also plans to prohibit individuals with criminal records related to drugs or tax crimes from becoming major shareholders of VASPs to prevent offenders from holding influential positions at licensed entities.
The Financial Intelligence Unit (FIU) will implement preemptive account-freezing mechanisms for serious offenses to prevent the dissipation of funds during investigations.
Officials aim to finalize the framework in the first half of 2026 and submit related legislative amendments to the National Assembly. Authorities also intend to deepen cooperation with international bodies, including the Financial Action Task Force. The package would mark the most extensive tightening of AML rules since the Special Financial Information Act was revised in 2021.
Ongoing tax enforcement efforts
The announcement follows broader efforts to combat tax evasion. On Oct. 19, a National Tax Service (NTS) official said the agency was prepared to conduct home searches and seize cold wallets and hard drives if individuals were suspected of hiding crypto assets offline to avoid taxes.
The NTS stated it would review the histories of tax delinquents using crypto-tracking tools, and those suspected of concealing assets offline would be subject to searches and seizures.
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