South Korea is preparing one of its most stringent anti-money laundering crackdowns, planning to extend cryptocurrency travel rules to cover transactions below 1 million won (680 USD).
According to Yonhap News, the chairman of the Financial Services Commission (FSC), Lee Eok-won, disclosed the plan during a session of the National Assembly's Legislation and Judiciary Committee on Wednesday, stating that the government will combat money laundering activities using cryptocurrency transactions.
"We will crack down on cryptocurrency money laundering and extend the travel rules to transactions below 1 million won," he said, according to the translation of his remarks.
This move addresses a loophole where users could split transfers into smaller amounts to evade identity information reporting requirements. Under the proposed changes, exchanges will be required to collect and share information about the senders and receivers of cryptocurrency transfers below 680 USD.
The Financial Services Commission stated that the new regulations aim to curb the increasing use of cryptocurrency channels for tax evasion, drug trafficking, and other overseas payment schemes.
The expanded rules will be implemented alongside new restrictions targeting "high-risk" offshore exchanges. Regulators claim these platforms pose a higher money laundering risk and will be prohibited from interacting with South Koreans.
Exchanges will also undergo stricter financial health reviews, expanding the registration standards for virtual asset service providers (VASP).
Additionally, the government will prohibit individuals with drug-related or tax crime convictions from becoming major shareholders of virtual asset service providers. This move aims to prevent malicious actors from holding influential positions in licensed companies.
The Financial Intelligence Unit (FIU) will introduce a pre-freezing account mechanism for serious violations to prevent funds from disappearing during investigations.
Officials plan to finalize the new framework in the first half of 2026 and submit legislative amendments to the National Assembly while expanding cooperation with global organizations such as the Financial Action Task Force (FATF).
The upcoming changes represent the most comprehensive tightening of anti-money laundering regulations since the update of the Specific Financial Information Act in 2021.
This announcement continues South Korea's previous efforts to combat tax evasion.
On October 19, an official from the National Tax Service (NTS) stated that if there are suspicions that owners are hiding their cryptocurrency assets offline to evade taxes, the agency is prepared to conduct home searches and seize cold wallets and hard drives.
The National Tax Service indicated that it will use cryptocurrency tracking programs to analyze tax delinquency histories, and if suspected of offline concealment, such searches and seizures will be conducted.
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