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South Korea announced plans to expand the travel rule to cover smaller crypto transactions and bar individuals with serious criminal records from becoming major shareholders in virtual asset businesses.
Expanding the ‘Travel Rule’ and Strengthening Scrutiny
The South Korean government is preparing a major crackdown on illicit activities within the virtual asset market. Financial Services Commission (FSC) Chairman Lee Eok-won announced sweeping regulatory plans, including the expansion of the travel rule and a critical new measure to ban individuals with serious criminal records from becoming major shareholders of virtual asset businesses.
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Lee Eok-won revealed the reforms during the Financial Intelligence Unit (FIU)’s 19th Anti-Money Laundering Day ceremony, stating, “We will strictly crack down on money laundering activities that exploit virtual asset transactions.”
Currently, South Korean virtual asset exchanges are required to collect sender and recipient information for cryptocurrency transactions exceeding approximately $730 (1 million won) under the travel rule. The new plan is to expand this regulation to cover transactions under this threshold. This aims to prevent criminals from bypassing current regulations by splitting up larger sums into multiple small transactions.
The FSC boss also emphasized stricter enforcement against international transactions, stating, “We will prevent virtual asset transactions with overseas exchanges that pose a high risk of money laundering.”
New ‘Preemptive Account Freeze’ System
According to a local report, individuals with criminal records for offenses such as drug use or tax evasion will be prevented from becoming major shareholders. The system will also be supplemented to require verification of financial status and social credit requirements during the virtual asset business registration review process. These measures are designed to ensure that the management and ownership of virtual asset exchanges are free from criminal influence and financially stable.
To combat the flight of criminal proceeds during investigations, the FIU is introducing a “preemptive account freeze system.” This measure will allow authorities to immediately suspend accounts suspected of holding funds used for crimes. To minimize inconvenience to the public, the Chairman confirmed that the target crimes will be limited to serious crimes against the public, such as drug offenses and gambling.
The FIU plans to announce the final details of this comprehensive reform package in the first half of next year and submit a revision to the Specific Financial Information Act (Special Funds Act) to the National Assembly. To ensure the quick establishment of the system, the government also plans to strengthen the capacity of the FIU organization. Finally, lawyers, accountants, and tax accountants will be brought into cooperation to establish robust anti-money laundering systems across their respective professions.
FAQ ❓
- What new crypto rules is South Korea introducing? The FSC will expand the travel rule to cover smaller transactions under 1 million won.
- Who is barred from owning crypto businesses? Individuals with serious criminal records, like drug use or tax evasion, cannot be major shareholders.
- How will authorities stop illicit funds? A new preemptive account freeze system will suspend accounts tied to serious crimes.
- When will reforms take effect? Final details will be announced in early 2026 with a law revision submitted to the National Assembly.