South Korea is preparing to expand anti-money laundering rules for virtual currency transactions. The government plans to expand virtual currency travel rules to cover remittances of less than 1 million won (approximately $680).
The move follows the adoption of the Virtual Asset User Protection Act, which took effect last July. This law prohibits insider trading, market manipulation, and illegal trading of crypto assets. It also gives regulators broad powers to inspect exchanges and impose penalties for violations.
Finance Commission Chairman Lee Ok-won told the National Assembly Legislation and Judiciary Committee that the government will take action against illegal financial activities related to virtual currencies. “We will crack down on virtual currency money laundering and expand the travel rule to transactions of 1 million won or less,” he said.
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Under the current threshold, users can split their transfers into smaller amounts to avoid identity checks. The new rules close this gap. Cryptocurrency exchanges must collect and share sender and recipient information for small transfers.
High-risk offshore exchanges will be blocked
The FSC said the rules target the growing use of cryptocurrencies in tax evasion, drug trafficking and offshore payment schemes. This will be implemented alongside tighter controls on “high-risk” offshore exchanges, which will be blocked from providing services to South Korean users.
South Korea is planning a major overhaul of AML to stop “smurfing” through small-value transactions, and will expand travel rules to all virtual currency remittances, including those under 1 million won. Regulators also plan to block high-risk foreign platforms and tighten financial requirements for domestic exchanges.
— Wu Blockchain (@WuBlockchain) November 28, 2025
Exchanges will be subject to stronger financial scrutiny. Registration criteria for virtual asset service providers (VASPs) will be expanded. Persons with a history of drug or tax crimes will be prohibited from becoming major shareholders in licensed virtual currency companies.
South Korea expands AML international cooperation
The Financial Intelligence Service will be given the power to freeze accounts at an early stage in serious cases to prevent funds from being transferred during investigations.
The authorities aim to complete the framework in the first half of 2026. Lawmakers will consider the proposed changes to the law. The Government will also expand cooperation with international organizations, including the Financial Action Task Force.
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