South Korea is pushing for stricter global cryptocurrency reporting standards, urging the Financial Action Task Force to expand the scope of the Crypto Travel Rule and close regulatory gaps that continue to exist across jurisdictions.
Key Takeaways
- South Korea’s Financial Intelligence Unit urged FATF to expand Crypto Travel Rule requirements to smaller transactions and potentially all crypto transfers.
- Regulators want the rule to apply to both sending and receiving Virtual Asset Service Providers to improve cross border transparency.
- South Korea plans to lower its domestic Travel Rule threshold to cover all crypto transactions starting in August.
- FATF also advanced work on DeFi risks, while highlighting low global compliance with crypto AML standards.
What Happened?
South Korea’s Financial Intelligence Unit presented a series of proposals during the 34th FATF plenary session in Paris, held from June 15 to June 19. The recommendations focused on expanding the Crypto Travel Rule, strengthening oversight of unregistered platforms, and reducing regulatory inconsistencies that allow illicit actors to exploit gaps in global compliance frameworks.
The discussions come as FATF continues reviewing how member jurisdictions are implementing anti-money laundering standards for virtual assets, with recent assessments showing uneven compliance across major crypto markets.
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
South Korea Pushes for Broader Travel Rule Coverage
The centerpiece of South Korea’s proposal is an expansion of the Crypto Travel Rule, an international anti-money laundering standard that requires exchanges to collect and share sender and recipient information when digital assets are transferred.
Currently, South Korea applies the Travel Rule to crypto transfers exceeding 1 million won, or roughly $650. However, regulators argued that limiting compliance requirements to larger transfers creates blind spots that can be exploited by criminals.
The Financial Intelligence Unit proposed extending the rule to smaller transactions and encouraged FATF member states to consider removing minimum transaction thresholds altogether.
If adopted more broadly, exchanges would be required to verify and transmit customer information for a much larger volume of crypto transactions, increasing transparency but also expanding compliance obligations.
Regulators Want Both Sides of Transfers Covered
South Korean officials also argued that Travel Rule requirements should apply equally to both the sending and receiving service providers involved in a transaction.
The proposal aims to ensure that information follows a transaction throughout its entire lifecycle rather than being collected by only one party.
According to FIU Director Lee Hyung joo, differences in licensing standards, registration requirements, supervisory practices, and oversight of offshore platforms continue to create opportunities for regulatory arbitrage.
He said:
South Korea believes stronger coordination between jurisdictions is necessary to prevent illicit actors from exploiting weaker regulatory environments.
Crackdown on Unregistered Crypto Platforms
Beyond Travel Rule reforms, the FIU called for stronger measures against offshore and unregistered crypto platforms.
Regulators warned that illicit finance activity increasingly flows through platforms operating outside established supervisory frameworks. South Korea suggested FATF members consider transaction restrictions for high risk unregistered providers while also strengthening customer due diligence standards.
The recommendations reflect growing concerns among regulators that criminals are shifting activity toward jurisdictions with lighter oversight.
South Korea Preparing Domestic Changes
The international proposal closely mirrors regulatory changes already scheduled to take effect in South Korea this August.
Under amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information, the Travel Rule threshold will be lowered from transactions above 1 million won to all transactions regardless of value.
Earlier proposals included mandatory suspicious transaction reporting for transfers exceeding 10 million won sent to overseas exchanges or personal wallets.
However, industry participants pushed back against the measure.
The Digital Asset Exchange Joint Council (DAXA) argued that a fixed reporting threshold would create excessive operational burdens while offering limited effectiveness compared to risk-based monitoring systems.
Following consultations with domestic exchanges, regulators ultimately abandoned the fixed reporting requirement and opted for a more flexible risk based approach.
FATF Highlights DeFi and Global Compliance Challenges
The FATF meeting also focused on emerging threats within the digital asset ecosystem.
Member states reviewed a new report examining risks associated with decentralized finance (DeFi) and discussed how virtual assets are increasingly linked to cybercrime, terrorist financing, and other illicit activities.
Officials also noted that artificial intelligence is helping criminals develop more sophisticated money laundering techniques.
Stablecoins received separate attention during the discussions, with FATF emphasizing the need for stronger international cooperation as stablecoin usage continues to expand across borders.
At the same time, FATF data showed that global implementation of Recommendation 15 remains inconsistent. As of April 2025, 49% of jurisdictions were rated partially compliant with crypto AML requirements, 21% were non compliant, and only about 29% were considered largely compliant or fully compliant.
CoinLaw’s Takeaway
In my experience, South Korea is positioning itself as one of the most proactive regulators when it comes to crypto compliance. I found the most important part of this proposal is not simply lowering transaction thresholds but pushing for greater consistency between countries. The biggest weakness in global crypto regulation remains uneven enforcement, and South Korea is clearly trying to close those gaps. If FATF members follow its lead, exchanges worldwide could face significantly higher compliance costs, but regulators may gain far better visibility into cross border crypto activity.
