South Korea's Cabinet approved regulatory amendments on August 11, 2026, eliminating the 1 million won threshold for crypto Travel Rule checks. Virtual-asset service providers must now share transaction data for all transfers, a move designed to stop users from splitting transactions to evade anti-money laundering controls. The rules also introduce risk-based restrictions on overseas exchanges and personal wallets, alongside stricter registration requirements for local providers.
Travel Rule threshold elimination
- ▪Under the revised rules, South Korean virtual-asset service providers must share transaction information with counterparties for all domestic transfers regardless of the transaction size.
- ▪The Korea Financial Intelligence Unit proposed expanding the Travel Rule after finding that approximately 60% of transfers between domestic virtual-asset service providers fell below the 1 million won threshold.
- ▪South Korea's Cabinet approved amendments to the Enforcement Decree of the Act on Reporting and Use of Certain Financial Transaction Information on August 11, 2026, eliminating the 1 million won minimum threshold for crypto Travel Rule checks.
Transaction splitting evasion cases
- ▪The Financial Services Commission stated that removing the 1 million won threshold is designed to prevent users from avoiding regulatory scrutiny by splitting transfers into smaller amounts.
- ▪The Financial Services Commission cited a suspected evasion case where a user deposited 200 million won to purchase Tether (USDT) and subsequently made 216 withdrawals in amounts below 1 million won.
Overseas exchange restrictions
- ▪The new rules establish a risk-based framework where transfers from domestic virtual-asset service providers to low-risk overseas exchanges are permitted, while transfers to high-risk counterparties are prohibited.
- ▪South Korean virtual-asset service providers must establish internal suspicious transaction monitoring systems for transfers of at least 10 million won involving overseas platforms or personal wallets.
Personal wallet transfer controls
- ▪The requirement for internal monitoring systems on transfers of at least 10 million won replaced an earlier March 2026 proposal that would have required direct reporting of all such transfers to the Korea Financial Intelligence Unit.
- ▪Transfers involving personal wallets or non-low-risk foreign exchanges will generally require the sender and the recipient of the virtual assets to be the exact same person.
VASP registration requirements
- ▪Applicants must not have undermined credit order through debt default over the past three years or have been deemed an insolvent financial institution within the past five years.
- ▪The amendments require virtual-asset service provider applicants to submit major shareholder details, including real-name identities and stock ownership status, extending to the parent corporation's largest shareholder and CEO if applicable.
- ▪The head of the Korea Financial Intelligence Unit can reject a registration if an applicant lacks the necessary personnel, computer systems, or facilities required for trading expertise and soundness.
Implementation timeline
- ▪The expanded Travel Rule and other transfer-related anti-money laundering requirements will take effect six months after the enforcement decree is formally promulgated.
- ▪The virtual-asset service provider registration provisions and rules concerning sanctions on former employees will take effect on August 20, 2026.
- ▪Existing virtual-asset service providers will receive a one-year grace period to comply with the new requirements covering debt ratios, staffing, computer infrastructure, and internal controls.
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