The Korean government promotes real-name registration for small cryptocurrency transfers, and remittances below 1 million KRW also need to be tracked.

Source: TokenPost Original Title: Government to Track Real-Name for Transfers Under 1 Million Won…Full Expansion of ‘Travel Rule’ Proposed Original Link:

Government Promotes Full Expansion of “Travel Rule”

The government of the Republic of Korea is advancing a plan to significantly strengthen the regulation of small cryptocurrency transfers. By requiring user information to be recorded even for transactions below 1 million Korean won, the aim is to tighten the flow of illegal small-scale funds that previously fell into regulatory gaps.

Strengthening of the Travel Rule: Now even 1 million won transactions will be tracked

The Financial Intelligence Unit (FIU)(FIU) held its first working group meeting on November 29 to discuss a comprehensive revision of the “Act on Reporting and Using Certain Financial Transaction Information”(Special Financial Transaction Law). The core content is to expand the scope of the “Travel Rule”(Travel Rule), so that transactions below 1 million won(approximately $697), which are currently not covered, will also be required to collect and share information such as the remitter’s and recipient’s names and wallet addresses.

The Travel Rule is essentially an international anti-money laundering standard that applies real-name verification when cryptocurrencies are deposited or withdrawn. Currently, it only applies to transactions above a certain amount. However, financial authorities point out that this standard is being exploited by “smurfing”(smurfing) techniques to launder money. Smurfing involves splitting large sums into multiple small transfers to evade regulation.

Small transfers also included in monitoring to track illegal fund flows

Financial authorities have recently prioritized issues such as small cryptocurrency transfers being used for drug trafficking, tax evasion, and illegal overseas fund transfers. Until now, monitoring mainly targeted large transactions, but as criminals reduce transaction sizes to evade regulation, the flow of criminal funds has shifted toward small transactions.

Additionally, due to the difficulty in controlling actual fund circulation, the standards of the Financial Action Task Force (FATF)(FATF) have not been met. The FIU states that this revision will improve consistency with international standards and strengthen supervision of virtual asset service providers (VASPs)(VASP).

Account freezing and expanded regulation of professionals are also under review

The FIU is also considering introducing a “temporary freezing” system for accounts suspected of involvement in crimes. This measure would prevent suspicious transaction assets from flowing to other accounts or overseas before an investigation begins, allowing for a temporary suspension of the account when there is reasonable suspicion of serious criminal activity.

At the same time, professionals such as lawyers and accountants who may be involved in complex financial transactions will be included as “obligated entities” under anti-money laundering laws. This aims to close regulatory gaps in professional fields that could be related to money laundering.

The Financial Supervisory Service has advised domestic exchanges to establish monitoring systems for transactions over 24 hours and has instructed them to report any abnormal transactions immediately to relevant authorities.

Domestic regulation aligned with global standards

While advancing domestic institutional standards, the government is also promoting international cooperation. South Korea recently joined the OECD(OECD)'s “Cryptocurrency Transaction Information Sharing Framework”(OCRF). Through this framework, cross-border cryptocurrency transaction information can be shared with tax authorities of different countries in a standardized manner.

According to OCRF, Korea plans to start collecting transaction records from 2026 and initiate automatic information exchange from 2027. Furthermore, from the second half of 2025, the reporting obligations for overseas cryptocurrency businesses will be strengthened, requiring prior registration with the Bank of Korea and periodic reporting of transactions.

This revision also includes measures to prevent individuals with a history of tax evasion from becoming major shareholders of virtual asset service providers, aiming to ensure the soundness and transparency of exchanges.

Market Analysis

Domestic cryptocurrency regulation is expanding to include “small” transactions. Transfers below 1 million Korean won, previously outside regulation, will now require real-name verification and information sharing. While anti-money laundering measures are strengthened, some investors’ freedom to transfer may be restricted.

Strategic Highlights

Exchanges need to quickly establish systems for collecting remitter and recipient information, and their abnormal transaction detection systems must operate 24/7. When using overseas services, prior registration and verification become crucial.

Terminology Explanation

• Travel Rule: An international anti-money laundering standard requiring sharing of personal information(name, wallet address) between exchanges during cryptocurrency transfers
• Smurfing(smurfing): An illegal method of splitting large sums into multiple small transfers to evade identity verification
• VASP: Virtual Asset Service Provider(exchanges, custodians, etc.)