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South Korea Reinforces Crypto Regulations with Expanded Travel Rule

South Korea is moving to tighten control over cryptocurrency transactions below 1 million won to close regulatory gaps exploited for illicit fund transfers.

The country's financial authorities are reviewing an extension of the travel rule, currently applicable primarily to larger transactions, to include all transfers under approximately $700.

This initiative comes from a task force led by the Korea Financial Intelligence Unit (FIU), aiming to revise the Special Act on reporting financial transactions.

One major concern is the rising trend of "smurfing," where large sums are split into smaller amounts to avoid scrutiny.

Officials believe that this tactic has led to an increase in tax evasion, drug trafficking, and the movement of illegal funds.

As a part of broader reforms, a proposed account suspension system would allow temporary freezing of accounts suspected of serious crimes.

Additionally, the task force is looking to extend anti-money laundering requirements to professionals involved in complex financial transactions, such as lawyers.

Changes are also anticipated for crypto exchanges, which are being urged to implement continuous monitoring systems for suspicious activity.

Moreover, South Korea plans to align its regulations with international standards, participating in the OECD’s Crypto-Asset Reporting Framework.

These developments embody a significant step toward enhancing the country’s crypto oversight and cooperation on a global scale.