South Korea is preparing one of its toughest Anti-Money Laundering (AML) crackdowns as it plans to expand its crypto Travel Rule to cover transactions under 1 million won ($680).
According to a Yonhap News report, the chairman of the country’s Financial Services Commission (FSC), Lee Eok-won, revealed the plans to the National Assembly’s Legislation and Judiciary Committee on Wednesday, saying that the government will crack down on money laundering activities that exploit crypto transactions.
“We will crack down on crypto money laundering […] expanding the Travel Rule to transactions under 1 million won,” he said, according to a translated version of his comments.
The move closes a gap that allowed users to break transfers into smaller pieces to avoid identity reporting mandates. With the planned change, exchanges will be required to collect and share the sender and receiver for crypto transfers under $680.
Combating drug trafficking, tax evasion and overseas schemes
The FSC said the new rules aim to stop the increasing use of crypto rails for tax evasion, drug trafficking and other overseas payment schemes.
The expanded rule will be implemented along with new restrictions targeting “high-risk” offshore exchanges. According to the regulator, these are platforms that pose a heightened risk of money laundering and will be blocked from interacting with South Koreans.
Exchanges will also undergo more stringent reviews of their financial health, widening the criteria for virtual asset service provider (VASP) registration.
Additionally, the government will prohibit individuals with criminal records involving drugs or tax crimes from becoming major shareholders of VASPs. This aims to prevent malicious actors from holding influential positions at licensed firms.
The Financial Intelligence Unit (FIU) will introduce pre-emptive account freezing mechanisms for serious offenses to stop 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 their collaboration with global bodies, such as the Financial Action Task Force.
The forthcoming changes represent the country’s most comprehensive move to tighten AML regulations since the Special Financial Information Act was updated in 2021.
Related: Do Kwon says five-year US sentence is enough as he faces 40 years in South Korea
South Korea cracks down on tax evasion
The announcement follows earlier efforts in South Korea to combat tax evasion.
On Oct. 19, a National Tax Service (NTS) official said the agency was prepared to conduct home searches and confiscate cold wallets and hard drives if the owners were suspected of hiding their crypto assets offline to avoid paying taxes.
The NTS said it would analyze tax delinquent histories using crypto-tracking programs, and if they are suspected of offline concealment, they will be subject to such searches and seizures.
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Source: https://cointelegraph.com/news/south-korea-expands-travel-rule-aml-overhaul?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
