South Korea is set to tighten oversight of crypto transfers involving overseas exchanges and self-hosted wallets as part of new anti-money laundering measures approved by the Cabinet.
Under the new rules, registered virtual asset service providers (VASPs) will be required to apply risk-based controls when handling these transfers. Crypto exchanges will also need to operate internal monitoring systems for transactions worth 10 million won or more.
The final framework is more flexible than an earlier proposal that would have automatically treated all transfers above 10 million won as suspicious. Following feedback from the industry, regulators decided to allow exchanges to assess the risk of each transaction individually instead of requiring automatic reporting based solely on the transfer amount.
Under the new system, transfers to low-risk overseas exchanges will still be allowed. Transfers involving self-hosted wallets or other overseas exchanges will generally be permitted only when the sender and receiver are the same person. Transactions involving high-risk counterparties may be restricted or blocked altogether.
The regulations also strengthen checks on larger or higher-risk transfers. Exchanges may ask customers for additional information, such as proof of ownership of an overseas account, the purpose of the transfer, or the source of funds when needed.
South Korea is also expanding its Travel Rule requirements. Once the new rules take effect, identifying information must accompany every transfer between registered domestic crypto service providers, regardless of the amount being sent. Receiving platforms will be required to verify this information and may reject transfers if it cannot be confirmed.
The changes come as South Korean authorities continue to increase oversight of the crypto sector. Regulators have already taken action against unregistered crypto businesses and have worked with app stores to limit access to platforms operating without proper registration.
The new transfer requirements will not take effect immediately. Regulators said the updated anti-money laundering rules and expanded Travel Rule provisions will begin six months after the revised decree is officially enacted. This transition period is intended to give exchanges time to build the necessary monitoring systems, risk controls, and verification procedures.
Officials say the goal is to reduce money laundering risks while still allowing legitimate crypto transactions to take place through properly regulated channels.
