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South Korea Pushes FATF to Eliminate Crypto Transfer Thresholds
South Korea's FIU urges FATF to scrap crypto travel rule thresholds, citing smurfing risks and offshore platform loopholes. Seoul plans to eliminate its own 1 million won (~$730) limit.
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Seoul's financial intelligence unit is pushing the Financial Action Task Force to scrap minimum transaction thresholds from cryptocurrency travel rules, the FIU said at a Paris plenary session this week.
The agency argues that value-based cutoffs let users split large transfers into smaller ones that escape detection, a practice known as smurfing. Current travel-rule frameworks in many countries exempt transactions below a certain dollar amount, the FIU said. The exemption lets individuals break a large transfer into, say, 10 transfers of 99,000 won each. The aggregated value never triggers the travel rule, so the receiving exchange never gets sender identity data.
The FIU proposed that FATF members apply the travel rule to all transfers regardless of size. It also recommended bilateral information-sharing between originating and receiving platforms, and enhanced verification for transactions involving offshore exchanges that lack proper registration.
"We see a regulatory gap that foreign virtual asset service providers exploit," an FIU official said during the plenary. "Transactions flow through platforms that do not comply with local licensing requirements and are not subject to anti-money laundering oversight."