South Korea is seeking stricter reporting requirements for cryptocurrency transfers, with regulators proposing that Anti-Money Laundering (AML) obligations be expanded to cover smaller transactions.
The proposal was presented by the country’s Financial Intelligence Unit (FIU) during a Financial Action Task Force (FATF) plenary meeting held in Paris last week. The move is part of efforts to build oversight of digital asset transactions and bring global compliance standards closer together.
South Korea currently requires crypto exchanges to comply with the FATF Travel Rule for transfers exceeding 1 million won (about $650). Under the new proposal, the reporting requirements would be extended to transactions below that threshold, allowing authorities to track a wider range of crypto movements.
Regulators target gaps in cross-border transfers
The FIU argued that Travel Rule obligations should apply equally to both the sending and receiving crypto asset service providers (CASPs). Officials said this would help close loopholes that criminals can exploit when moving funds across jurisdictions.
South Korean regulators also urged stronger action against offshore and unregistered crypto platforms. According to the FIU, such platforms are increasingly used in illicit finance activities, taking advantage of differences in regulatory standards across countries.
The proposal shows regulators’ growing concern that inconsistent enforcement of crypto rules continues to create blind spots in the global financial system.
Why is South Korea seeking stricter rules now?
The push comes as international regulators continue to assess the effectiveness of crypto AML measures introduced over the past several years.
FATF expanded its AML framework in 2019 to cover crypto assets and service providers under Recommendation 15. However, implementation has remained uneven across jurisdictions.
A FATF review published in 2025 found that nearly half of assessed jurisdictions were only partially compliant with crypto regulations, while more than one-fifth remained non-compliant. Only a minority were rated largely compliant or fully compliant with the standards.
Why regulators are watching DeFi more closely
Alongside discussions on the Travel Rule, FATF approved a new report examining risks linked to decentralized finance (DeFi).
FIU Commissioner Lee Hyung Ju welcomed the report, saying regulatory arbitrage remains a major challenge for authorities. He noted that differences in licensing requirements, supervision standards and oversight of offshore operators continue to create opportunities for bad actors to exploit the system.
Additionally, South Korea is considering expanding access to its upcoming crypto transfer licensing regime, a move that could allow fintech companies to compete alongside cryptocurrency exchanges in the growing cross-border digital asset payments market.
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