South Korea is gearing up for its toughest anti-money laundering (AML) crackdown yet as it plans to expand its crypto travel rule to cover transactions under 1 million won (80,680).
According to a report by Yonhap News, the chairman of the country’s Financial Services Commission (FSC), Lee Yok-won, revealed plans to the National Assembly’s Legislation and Judiciary Committee on Wednesday, saying the government will crack down on money laundering activities that exploit crypto transactions.
“We will eliminate crackpo money laundering (…) by expanding crypto money laundering (…) to less than 1 million transactions,” he said, according to a translated version of his remarks.
The move closes a loophole that allows consumers to break transfers into smaller chunks to avoid identity reporting mandates. With the planned change, exchanges will require senders and receivers to collect and share crypto transfers of less than 680 kroner.
Combating drug trafficking, tax evasion and offshore schemes
The FSC said the new rules are aimed at curbing the growing use of cryptocurrencies for tax evasion, drug trafficking and other overseas payment schemes.
The expanded rule will be implemented with new restrictions targeting “high risk” offshore exchanges. According to the regulator, these are the platforms that pose a high risk of money laundering and will be barred from communicating with South Koreans.
The exchanges will also have more stringent assessments of their financial health, broadening the criteria for virtual asset service provider (VASP) registration.
Additionally, the government will prohibit individuals with criminal records related to drug or tax offenses from becoming major shareholders of VASPS. It aims to prevent malicious actors from holding influential positions in licensed firms.
The Financial Intelligence Unit (FIU) will introduce a pre-emptive account freezing mechanism for serious crimes to prevent funds from disappearing during investigations.
Officials plan to finalize the new framework and present legislative amendments to the National Assembly in the first half of 2026, while expanding their cooperation with international bodies, such as the Financial Action Task Force.
The changes represent the nation’s most comprehensive move to tighten AML regulations since updating the Special Financial Information Act in 2021.
Related: Kya Kwon says the five-year US sentence is enough because he faces 40 years in South Korea
South Korea cracked down on tax evasion
The announcement follows earlier efforts in South Korea to crack down on tax evasion.
On October 19, a National Tax Service (NTS) official said the agency is ready to conduct house searches and seize cold wallets and hard drives if owners are suspected of hiding their crypto assets offline to avoid paying taxes.
NTS said it will 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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