South Korea Removes Travel Rule Threshold, Applies It to All Crypto Transfers

South Korea's Cabinet approved amendments on Tuesday to its financial monitoring decree that remove the 1 million won (about $700) threshold for the Travel Rule. Sender and recipient identification is now required for all transfers between registered crypto exchanges, regardless of amount.

Previously, only transfers above that threshold fell under the Travel Rule. Platforms receiving funds must now collect sender and recipient information, and can request missing data or reject a transaction when the details are incomplete. The old 1 million won threshold effectively worked as a loophole. Staying under that amount was enough to avoid extra identity checks, and that fallback option is now gone.

South Korea's Cabinet Drops the $700 Travel Rule Threshold

According to the country's Financial Intelligence Unit, removing the threshold is meant to close a loophole that let users dodge the rule by splitting large transfers into smaller amounts. Previously, keeping each transfer below 1 million won was enough to avoid extra scrutiny.

The regulator cited a specific example of this pattern. One user deposited about 200 million won into a crypto exchange, bought USDT, and then made 216 separate withdrawals, each below the 1 million won threshold.

How the Regulator Uncovered the Workaround

Cases like this are what pushed authorities toward removing the threshold entirely. This kind of transfer splitting had gone largely unnoticed by monitoring systems built to flag individual transactions rather than a wallet's cumulative activity over time.

New AML Rules for Foreign Exchanges and Personal Wallets

The amendments also introduce separate anti-money-laundering requirements for transfers to foreign exchanges and personal wallets. Local platforms must assess counterparty risk themselves and decide whether to allow a given transfer. That kind of assessment used to be largely left to exchanges' own discretion. It is now a formal obligation written into the decree.

• Transfers to low-risk foreign exchanges are permitted without extra restrictions
• Transfers to other foreign exchanges and personal wallets are generally allowed only when the sender and recipient are the same person
• High risk: transfers to counterparties deemed high-risk are prohibited outright
• Platforms must build their own suspicious-transaction monitoring systems for large cross-border transfers

Platforms Must Monitor Large Cross-Border Transfers

The threshold for mandatory monitoring of suspicious transactions tied to foreign exchanges and personal wallets was set at 10 million won, roughly $7,000. That is well above the base Travel Rule threshold and applies specifically to higher-risk activity.

Tighter Registration Requirements for Crypto Providers

The decree also raises the bar for registering crypto platforms themselves. Regulators will review a company's financial health, internal controls, staffing and infrastructure, and step up scrutiny of major shareholders at exchanges.

VASP registration requirements take effect on August 20, though already-registered platforms get an extra year to meet some financial, staffing and infrastructure requirements. The expanded Travel Rule and the rest of the new AML rules kick in six months after the decree is formally published.

What the Changes Mean for the Market

South Korea joins a growing list of Asian regulators tightening control over crypto transfers this summer, including Japan and Thailand. For users, that means more verification requests when withdrawing funds, especially when dealing with foreign platforms.

For exchanges, the changes mean added compliance and monitoring costs. Smaller local platforms will likely need to invest in new transaction-screening systems or turn to third-party compliance vendors. Still, the regulator is betting that full Travel Rule coverage will make transfer-splitting schemes economically pointless within the next few months.