Finance11 August, 20262 min read
South Korea Expands Crypto Travel Rule to All Virtual Asset Transfers, Tightens VASP Oversight
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Travel Rule applies to all virtual asset transfers, with no minimum threshold. VASP registration reviews tightened; AML obligations strengthened.
Travel Rule to all
South Korea’s Cabinet approved amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information that expand the crypto “travel rule” to cover virtual asset transactions under 1 million won. The Financial Intelligence Unit said the travel rule will now apply to the full amount, removing the current 1 million won threshold that previously required a virtual asset service provider to provide relevant information only when transferring virtual assets equivalent to 1 million won or more.
“The amendment removes this amount threshold and applies the travel rule to all transfer transactions regardless of amount.”
The change is designed to prevent so-called "split remittances," in which transactions are divided into amounts under 1 million won to evade rules. One cited case involved a user depositing approximately 200 million Korean won into a crypto exchange and then making 216 withdrawals, each worth less than 1 million won, after buying Tether USDt (USDT).
Overseas and wallets
Under the amendments, transfers involving overseas virtual asset service providers or personal wallets will face risk-based permission scopes, with low-risk overseas exchanges allowed while other overseas exchanges and personal wallets are approved only when senders and recipients are verified. The rules also prohibit transactions classified as high risk, and for transactions of 10 million won or more, providers must establish and operate their own suspicious transaction management systems.
A Financial Services Commission official said the measures aim to block attempts to evade regulations by slicing transactions below 1 million Korean won or exploiting overseas exchanges and personal wallets for money laundering, while enhancing transparency across virtual asset transfers. The FIU also said receiving platforms must obtain sender and recipient information and can request missing data or reject transfers when required data is unavailable.
VASP screening tightened
The revised decree also tightens virtual asset service provider registration review by expanding the scope of controlling shareholders subject to review to include shareholders who appointed a majority of the CEO or directors. If the largest shareholder is a corporation, the corporation’s largest shareholder and representative will also be subject to review, and grounds for rejecting registrations include lacking a sound financial condition such as a debt-to-equity ratio of 200% or less.
The rules specify that executives and representatives must meet eligibility requirements under the Act on Corporate Governance of Financial Companies, and registrations may be rejected if there is a record of criminal punishment of a fine or higher for violations of anti-money laundering or financial-related laws. Among the amendments, provisions related to the virtual asset service provider registration system and the notification of sanctions for retirees take effect on the 20th, while the remaining provisions, including the expanded travel rule, take effect six months after promulgation.