South Korea Intensifies Anti-Money Laundering Efforts Targeting Crypto Transfers Below $680

South Korea is gearing up for one of its most stringent Anti-Money Laundering (AML) initiatives as it seeks to extend its crypto Travel Rule to encompass transactions below 1 million won, which is approximately $680.

Key Takeaways

South Korea plans to expand its crypto Travel Rule to include transactions of less than $680.
The plan aims to combat money laundering, tax evasion, and drug trafficking through cryptocurrencies.
Stricter regulations will be enforced on "high-risk" offshore exchanges and individuals with criminal records in the crypto service sector.
The new framework is expected to be finalized by mid-2026.

South Korea targets sub-$680 crypto transfers in sweeping AML crackdown

Broadening the Scope of AML Regulations

According to a report by Yonhap News, Lee Eok-won, chairman of the Financial Services Commission (FSC), shared this initiative during a meeting with the National Assembly’s Legislation and Judiciary Committee. He emphasized the government's determination to tackle money laundering activities that abuse cryptocurrency transactions.

“We will enhance our efforts against crypto money laundering by extending the Travel Rule to transactions under 1 million won,” he stated, as per a translated version of his remarks. This adjustment aims to close loopholes that allowed users to split transfers into smaller amounts to bypass identity reporting requirements. Under the new regulations, exchanges will be mandated to collect and share information about both the sender and the receiver for transactions below $680.

Addressing Drug Trafficking, Tax Evasion, and Other Criminal Activities

The FSC indicated that the new regulations intend to curb the rising use of cryptocurrency for tax evasion, drug trafficking, and other international payment schemes.

This enhanced Travel Rule will roll out alongside new restrictions on "high-risk" offshore exchanges, which the FSC has identified as platforms that significantly increase the risk of money laundering. These exchanges will be barred from engaging with South Korean users.

Moreover, exchanges will face more stringent assessments concerning their financial stability, thereby expanding the criteria for registering as virtual asset service providers (VASPs). The government will also ban individuals with criminal records related to drugs or tax offenses from being major shareholders in VASPs. This measure aims to prevent individuals with malicious intent from obtaining key positions in licensed companies.

As part of this initiative, the Financial Intelligence Unit (FIU) plans to implement pre-emptive account freezing mechanisms for serious criminal offenses to ensure that funds do not vanish during investigations.

Officials expect to finalize these regulations in the first half of 2026 and will submit necessary legislative amendments to the National Assembly, all while enhancing cooperation with international organizations such as the Financial Action Task Force.

These impending reforms signify South Korea’s most sweeping effort to bolster AML regulations since the Special Financial Information Act was updated in 2021.

Ongoing Fight Against Tax Evasion

This announcement aligns with previous actions taken by South Korea to combat tax evasion.

On October 19, a National Tax Service (NTS) official disclosed that the agency is prepared to conduct home inspections and seize cold wallets and hard drives from individuals suspected of hiding crypto assets offline to evade taxes. The NTS intends to utilize crypto-tracking software to analyze tax delinquency histories, and if concealment is suspected, affected individuals will be subject to inspections and asset seizures.

This article provides insights into South Korea’s expanding regulations concerning crypto transactions and the ongoing battle against money laundering and tax evasion within the cryptocurrency landscape.