South Korea is making ready to tighten oversight of cryptocurrency transfers under 1 million received, closing a spot that regulators say has more and more been used to maneuver illicit funds with out triggering id checks.

The transfer would broaden the nation’s so-called journey rule, which at present applies primarily to bigger transactions.

The plan is being reviewed by monetary authorities following the launch of a job pressure led by the Korea Monetary Intelligence Unit (FIU) to revise the Act on Reporting and Utilizing Specified Monetary Transaction Data, also known as the Particular Act.

Regulators Flip Consideration to Small Crypto Funds as Smurfing Grows

In accordance with native media stories, officers are analyzing whether or not to require exchanges to gather and share sender and recipient data for all digital asset transfers, together with these value 1 million received or much less.

The journey rule, typically described as a real-name system for crypto, obliges exchanges to confirm and file person particulars comparable to names and pockets addresses throughout deposits and withdrawals.

Authorities have pointed to the rising use of “smurfing,” a way through which massive sums are damaged into many small transfers to keep away from reporting thresholds.

Whereas higher-value transfers have lengthy been monitored, officers imagine criminals have shifted exercise towards low-value transactions to bypass current controls.

Monetary authorities have linked these patterns to tax evasion, drug trafficking, and the motion of unlawful funds abroad.

On November 29, the primary assembly of the FIU job pressure, which is headed by the Director Lee Hyeong-ju, was held to chart its broader reforms.

The main target of the talk is on tightening management over the digital asset service suppliers, harmonizing the home laws with the worldwide ideas of the Monetary Motion Process Pressure, and enhancing the inspection and sanctioning mechanisms.

Authorities as effectively have admitted that the anti-money laundering regime, which was instituted over 20 years in the past in South Korea, has not been maintaining with cross-border digital crime and the booming digital assets.

South Korea Strikes to Freeze Suspicious Crypto Accounts

Past the journey rule growth, the duty pressure is contemplating extra measures geared toward stopping funds from disappearing earlier than investigations can start.

This contains introducing an account suspension system that may enable authorities to quickly freeze accounts suspected of being tied to critical crimes.

The proposed revisions would additionally prolong anti-money laundering obligations to sure professionals, comparable to attorneys and accountants, who could also be concerned in advanced monetary transactions.

The crackdown on small transfers is part of a broader improve in crypto regulation that’s already taking place.

Native exchanges have been suggested by the Monetary Supervisory Service to ascertain round the clock monitoring methods to determine irregular buying and selling and report the suspicious exercise to the regulators.

South Korea has acted equally and restricted entry to worldwide transactions thought-about to be excessive danger, forcing main software shops to delete unregistered international apps that cater to the Korean market.

Concurrently, exchanges are underneath much less examination of their monetary wellness and proprietorship kinds.

Proposed guidelines would bar people with previous convictions for tax or drug-related crimes from turning into main shareholders in licensed crypto companies.

From the second half of 2025, companies concerned in cross-border crypto transactions may also be required to preregister and submit common stories to the Financial institution of Korea.

These home steps are unfolding alongside South Korea’s participation in worldwide data-sharing efforts.

The nation has joined the OECD’s Crypto-Asset Reporting Framework, which can allow tax authorities to alternate standardized data on crypto transactions throughout borders.

Transaction data are anticipated to start being collected subsequent 12 months, with full data sharing scheduled to start out in 2027.

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