South Korea Abolishes Crypto Travel Rule Threshold to Block Structuring Evasion

Woofun AI reports that South Korea's Cabinet approved amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information, effectively eliminating the value threshold for the crypto Travel Rule. This policy shift mandates that all transfers between registered virtual asset service providers (VASPs) undergo full sender and recipient information verification, regardless of transaction size.

The primary driver for this change is the prevention of structuring evasion, as noted by the Financial Intelligence Unit. Previously, the 1 million won (about $700) threshold allowed users to split large transfers into smaller amounts to bypass scrutiny. A cited case involved a user depositing 200 million won to purchase Tether USDt (USDT), followed by 216 withdrawals, each deliberately kept below the 1 million won limit to avoid detection.

New Anti-Money Laundering (AML) requirements now extend to transfers involving overseas crypto exchanges and personal wallets. Per Woofun AI, platforms must assess counterparty risk, permitting transfers to low-risk foreign exchanges while generally restricting others to same-person transactions. High-risk counterparties are prohibited entirely, and platforms must deploy suspicious transaction monitoring systems for transfers worth at least 10 million won involving foreign entities or personal wallets.

Registration standards for crypto service providers are simultaneously being tightened, covering financial health, internal controls, staffing, and infrastructure standards. Scrutiny of major shareholders is also expanded under the new decree. These VASP registration provisions take effect on Aug. 20, though existing providers are granted an additional year to comply with specific financial, staffing, infrastructure, and internal control requirements.

The expanded Travel Rule and associated transfer-related AML requirements will take effect six months after the decree is promulgated. This phased implementation aims to close regulatory gaps exploited by suspected money laundering activities involving overseas exchanges and personal wallets.