- South Korea seeks Travel Rule coverage for smaller crypto transfers globally.
- FIU targets AML loopholes created by transaction splitting and smurfing.
- New rules will require exchanges to monitor and share more transfer data.
South Korea is moving to strengthen cryptocurrency transaction monitoring by expanding Travel Rule requirements to smaller transfers. The proposal aims to close anti-money laundering gaps that allow users to split large transactions into smaller amounts to avoid scrutiny. Regulators are also seeking broader global adoption of stricter standards through the Financial Action Task Force (FATF).
South Korea Pushes for Broader Travel Rule Coverage
South Korea’s Financial Intelligence Unit (FIU) has called for stricter implementation of the Crypto Travel Rule during recent FATF discussions in Paris. The proposal focuses on extending compliance requirements to lower-value crypto transfers, which currently fall below reporting thresholds in many jurisdictions.
Under existing South Korean regulations, exchanges must collect and share sender and recipient information for transfers exceeding 1 million won. Regulators argue that this threshold creates loopholes that can be exploited by individuals attempting to avoid anti-money laundering checks through transaction splitting, commonly known as smurfing.
JUST IN: South Korea is tightening its crypto Travel Rule, expanding AML surveillance to even smaller transfers (around or below 1M won), meaning exchanges must now collect and share sender and receiver data on more transactions to close loopholes used for “smurfing” and illicit… pic.twitter.com/iFgGxj5Fja
— EyeWhales (@EyeWhales) June 22, 2026
The FIU wants Travel Rule obligations to apply to a wider range of transactions. Officials have also encouraged FATF members to consider removing minimum thresholds altogether. If adopted, exchanges would be required to process and transmit customer information for significantly more transactions.
Regulators Target Cross-Border Compliance Gaps
South Korean authorities are also pushing for Travel Rule requirements to apply equally to both sending and receiving virtual asset service providers. The objective is to ensure transaction data remains available throughout the entire transfer process.
According to the FIU, differences in licensing systems, supervision standards, and registration requirements continue to create opportunities for regulatory arbitrage. Criminal actors can exploit these inconsistencies by moving funds through jurisdictions with weaker oversight.
The proposal also includes stronger scrutiny of offshore and unregistered crypto platforms. Regulators believe these entities pose a growing risk to global anti-money laundering efforts due to limited supervision and compliance controls.
South Korea has suggested that FATF members consider stricter measures for transactions involving high-risk or unregistered providers. These steps could include enhanced due diligence requirements and restrictions on transfers where customer information cannot be verified.
Domestic Rule Changes Set for August
The international proposal aligns with regulatory changes already planned within South Korea. Authorities are preparing to lower the domestic Travel Rule threshold so that all cryptocurrency transfers will be subject to compliance requirements regardless of value.
Earlier discussions included mandatory reporting for large transfers to overseas exchanges and personal wallets. However, local industry participants argued that fixed reporting thresholds would create operational challenges while providing limited benefits.
Regulators ultimately opted for a risk-based monitoring approach. Exchanges will be expected to identify suspicious activity through transaction analysis and internal compliance systems rather than relying solely on predetermined reporting levels.
The move reflects South Korea’s broader effort to strengthen oversight of digital asset markets while supporting international coordination on anti-money laundering standards. As FATF continues reviewing global crypto compliance, the country is positioning itself among the strongest advocates for stricter monitoring of cryptocurrency transfers.
