South Korea is preparing one of its most extensive anti–money laundering crackdowns in the crypto sector, closing long-standing loopholes that allowed users to move small amounts without identity checks. Under new regulatory changes, the government will require all cryptocurrency transfers — including those below 1 million won (approximately $680) — to fall under an expanded “travel rule.” This means exchanges must collect and share verified identity details of both senders and receivers, regardless of the transfer size.
Previously, many individuals avoided scrutiny by splitting large amounts into multiple micro-transactions. Regulators now aim to eliminate that workaround entirely, ensuring every transfer is monitored for suspicious activity, tax evasion, and illicit financial flows.
The new framework also places tighter restrictions on exchanges and virtual asset service providers. Platforms deemed high-risk or located offshore may be barred from serving Korean customers. Additionally, companies applying for operating licenses will face more stringent financial and criminal-background reviews. Investors or major shareholders with histories of financial, tax, or drug-related offenses can now be disqualified from involvement in regulated crypto businesses.
South Korea’s Financial Intelligence Unit has also been granted stronger enforcement powers. It will be able to freeze suspicious accounts in advance, preventing illicit funds from being moved or withdrawn while investigations are ongoing.
The full regulatory overhaul is expected to be finalized by mid-2026. Once implemented, it will become one of the most comprehensive crypto-AML regimes in the region, strengthening transparency and oversight across the digital assets market.
Why This Matters
- Every crypto transfer — big or small — will require identity verification.
- Loopholes involving small split transactions will now be closed.
- High-risk and offshore exchanges face potential restrictions or blocks.
- Authorities gain stronger powers to freeze suspicious accounts.
- The crypto sector in South Korea moves toward significantly higher transparency and compliance.
