South Korea closes crypto loophole with AML crackdown on sub 680 transfers

TLDR

• Korea targets small crypto transfers with strict AML identity checks.
• Splitting transactions no longer hides senders under 1M won limit.
• VASPs face tougher licensing and leadership screening under reforms.
• Tax agency to raid homes and seize cold wallets for hidden crypto.
• New 2026 rules aim to block illicit flows through tighter crypto control.

South Korea closes crypto loophole with AML crackdown on sub 680 transfers. The government will force crypto platforms to collect identity information for small transactions. It will block users from splitting transfers to evade reporting requirements.

Expanded Travel Rule applies to sub-680 transfers

Authorities said South Korea closes crypto loophole with AML crackdown on sub 680 transfers by expanding the Travel Rule. All crypto exchanges will track sender and receiver for any transfer under one million won. Exchanges must report identity data for both participants when a transfer triggers the threshold.

This move closes a gap that allowed users to split transfers and avoid identity checks. The regulator warned that people exploited crypto rails to bypass reporting rules. Hence small transfers will no longer evade oversight.

The plan sets the first half of 2026 for rollout. South Korea closes crypto loophole with AML crackdown on sub 680 transfers. Regulators aim to enforce the new rules soon after approval.

Stricter VASP rules and offshore exchange bans

Officials stressed that South Korea closes crypto loophole with AML crackdown on sub 680 transfers through stricter Virtual Asset Service Provider (VASP) oversight. Firms with weak financial records will lose license approval. Regulators will block offshore platforms from dealing with domestic clients.

The agency will remove individuals with drug or tax-crime records from VASP leadership roles. This move aims to prevent malicious actors from controlling licensed firms. New rules target transparency and risk reduction in crypto operations.

Regulators will allow pre-emptive freezing of accounts tied to serious offenses. South Korea closes crypto loophole with AML crackdown on sub 680 transfers. The system will strengthen oversight over suspicious crypto moves.

Tightened tax enforcement and regulatory background

Authorities reaffirm that South Korea closes crypto loophole with AML crackdown on sub 680 transfers alongside new tax enforcement measures. The national tax agency plans home searches for users suspected of hiding crypto assets offline. They will seize cold wallets and hard drives if evidence shows tax evasion.

Regulators updated the Special Financial Information Act earlier this decade to include virtual assets. The law already required large transfers to undergo reporting. However, the small-transfer loophole persisted until now.

The government plans to finish drafting reforms in the first half of 2026. South Korea closes crypto loophole with AML crackdown on sub 680 transfers. Regulators hope the reforms will reduce illicit flows through crypto.

These measures mark the most comprehensive update since the 2021 law update. The new regime will require crypto platforms to monitor even small transfers and enforce stricter VASP standards. In this way, the government aims to block money laundering, tax evasion, and illicit cross-border flows through crypto transfers.

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