- South Korea will eliminate the $700 threshold for crypto Travel Rule compliance, applying it to all transfers between registered VASPs.
- The Cabinet approved amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information on Tuesday.
- New AML rules will require registered exchanges to assess risk for transfers involving overseas exchanges and personal wallets, banning high-risk transactions.
- Platforms must establish suspicious transaction monitoring for transfers over $7,000 involving foreign exchanges or personal wallets.
- Registration requirements for crypto service providers will tighten, with most provisions taking effect Aug. 20 and a one-year grace period for existing providers.
South Korea has expanded its crypto Travel Rule to all transfers between registered virtual asset service providers, removing the previous $700 threshold, after the country’s Cabinet approved amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information on Tuesday.
Receiving platforms must now obtain sender and recipient information for all transfers, and they can request missing data or reject transactions when required details are unavailable. The Financial Intelligence Unit stated that removing the threshold is intended to prevent users from circumventing the rule by splitting transfers into smaller amounts.
The agency cited one case where a user bought Tether USDt after depositing about $140,000 into a crypto exchange and then made 216 withdrawals, each worth less than $700. Meanwhile, the amendments introduce new Anti-Money Laundering requirements for transfers involving overseas crypto exchanges and personal wallets.
Registered local VASPs must determine which transfers they allow based on the counterparty’s risk level. Transfers to low-risk overseas exchanges will be permitted, while transfers involving other foreign exchanges and personal wallets will generally be allowed only when the sender and recipient are the same person.
However, transactions involving counterparties deemed high risk will be prohibited. Crypto platforms must also establish their own suspicious transaction monitoring systems for transfers worth at least $7,000 involving foreign exchanges or personal wallets.
South Korean authorities said suspected money laundering involving overseas exchanges and personal wallets has increased as gaps in existing AML rules have been exploited. The decree also strengthens registration requirements for crypto service providers, including financial health, internal controls, staffing, and infrastructure standards, while expanding scrutiny of major shareholders.
The VASP registration provisions will take effect on Aug. 20, although existing providers will have an additional year to comply with some financial, staffing, infrastructure, and internal control requirements. The expanded Travel Rule and other transfer-related AML requirements will take effect six months after the decree is promulgated.
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