After the Financial Intelligence Unit (FIU) of South Korea convened virtual asset exchange representatives on June 4 to gather input, it decided to revise the enforcement decree amendment to the Act on Reporting and Use of Specified Financial Transaction Information, removing the mandatory reporting obligation for transfers of virtual assets of 10 million won and above. Instead, it will require each company to establish internal risk management systems to manage anti-money laundering (AML) risks on its own. The original amendment required in-country businesses to report to the FIU if the transfer exceeded 10 million won, regardless of the level of risk.
Official reasons for canceling mandatory reporting: FIU explains
According to the FIU officials’ public explanation, the problem with the original mandatory reporting design was that setting a single threshold of 10 million won would cause firms to submit large volumes of reports without conducting any risk assessment, making it difficult for the FIU to identify genuinely high-risk transactions. After canceling the mandatory threshold, the FIU will require each company to establish an internal AML risk management system to qualitatively assess suspicious transactions and decide whether to report them, rather than using a uniform transaction-amount trigger to impose reporting obligations.
Four other adjustments by the Korea FIU
In addition to canceling mandatory reporting obligations, the amendment also confirms other changes in the following four areas:
· The scope of the Travel Rule expands from transfers of 1 million won and above to all amounts, with no minimum threshold;
· The enhanced customer due diligence (including verification of the source of funds and the purpose of the transaction) for high-risk suspicious transactions changes from mandatory enforcement to discretionary execution, requiring it only when a company determines that the suspicious transaction risk is especially high;
· A one-year grace period is granted for small businesses that cannot meet the requirements temporarily, where the debt-to-liability ratio does not exceed 200%;
· The regulation that AML-related IT equipment originally had to be located domestically is slightly relaxed, allowing overseas cloud services to be used for activities other than processing personal identification information and personal credit information.
Frequently asked questions
What operational impacts does expanding the Travel Rule to all amounts have on South Korea’s crypto exchanges?
Under the amendment, the Travel Rule will apply to virtual asset transfers of all amounts (with no minimum threshold), rather than originally applying only to transfers of 1 million won and above. This means that exchanges, when processing inter-chain transfers of any size, must transmit information about the sender and the beneficiary in accordance with the Travel Rule. The FIU did not provide further operational details in this amendment update.
What specific industry views in South Korea drove the FIU’s policy adjustments?
DAXA submitted written comments in April 2026, representing 27 VASPs registered in South Korea, and stated that if the original amendment were implemented as-is, the uniform 10 million won reporting threshold would create confusion for the industry. The main issue was that it would force firms to report in large volumes without conducting risk assessments, diverting regulatory and compliance resources. After the FIU convened industry representatives on June 4 to gather input, it adopted this core recommendation.
Is the timeline for the amendment to take effect on August 20 already finalized?
According to the FIU’s explanation, the amendment still must go through legislative review procedures by the Ministry of Government Legislation (Ministry of Government Legislation) and other relevant authorities, and it can be implemented on August 20 only after passing the review. As of June 5, 2026, the implementation date is a conditional planned timetable, and the final implementation still depends on the results of the legislative review.
