South Korea Tightens Crypto Transfers Under 1M Won, Travel Rule in Focus

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South Korea has announced plans to strengthen regulations on cryptocurrency transfers under 1 million won (over $600), known as the “travel rule”, aiming to close a loophole that has allowed users to bypass identity checks through “smurfing,” a method of splitting transactions to move illicit funds.

Key Points

South Korea plans to enforce the Travel Rule for crypto transfers under 1 million won to prevent smurfing.
Authorities aim to strengthen AML oversight, align with international FATF standards, and improve enforcement.
Measures include possible account suspension systems and extended AML obligations for professionals like lawyers and accountants.

Local reports indicate that South Korean financial authorities are considering expanding the “travel rule” to require the collection of sender and recipient information for anti-money laundering (AML) purposes on cryptocurrency transfers of 1 million won or less.

South Korea’s “travel rule,” also called the real-name system for virtual assets, mandates that domestic crypto exchanges collect the names and wallet addresses of both senders and recipients for all deposit and withdrawal requests.

Following the establishment of a task force by the Korea Financial Intelligence Unit (FIU) to update the Act on Reporting and Using Specified Financial Transaction Information, known as the Special Act, financial authorities are reviewing a plan to address the rising use of “smurfing,” a tactic in which criminals exploit low-value transactions to evade existing controls.

Furthermore, South Korean financial authorities have connected these patterns to tax evasion, drug trafficking, and the cross-border movement of illicit funds. The task force’s discussions are focusing on strengthening oversight of virtual asset service providers, aligning domestic regulations with international Financial Action Task Force standards, and improving inspection and enforcement mechanisms.

The task force is also reportedly considering the introduction of an account suspension system to block rapid withdrawals from accounts suspected of criminal activity, as well as extending anti-money laundering obligations to professionals, including lawyers, accountants, and tax advisors.

As South Korea continues to tighten its cryptocurrency regulations, the broader implications for both domestic and international markets are becoming increasingly clear. Enhanced oversight could drive greater transparency and accountability within the crypto ecosystem, potentially attracting institutional investors seeking safer, compliant environments.

At the same time, smaller traders and startups may face higher compliance costs and operational challenges as exchanges implement more robust monitoring and reporting systems. Observers note that how these rules are enforced, combined with the evolving global regulatory landscape, will shape the country’s role in the digital asset sector for years to come, balancing innovation with security and trust.

Frequently Asked Questions

The Travel Rule requires crypto exchanges to collect and share the names and wallet addresses of senders and recipients for transactions, ensuring transparency and helping prevent money laundering.

Smurfing, where criminals split large transfers into smaller amounts to bypass identity checks, has become common. Expanding oversight to smaller transactions helps close this loophole.

Larger exchanges and institutional investors may benefit from increased trust and security, while smaller traders and startups could face higher compliance costs and operational challenges.

MICHAELA

Michaela is a news writer focused on cryptocurrency and blockchain topics. She prioritizes rigorous research and accuracy to uncover interesting angles and ensure engaging reporting. A lifelong book lover, she applies her passion for reading to deeply explore the constantly evolving crypto world.

Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is the official publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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