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South Korea Pushes FATF to Kill Crypto Travel Rule Threshold
South Korea's FIU urged FATF to scrap the Travel Rule's $730 threshold, arguing it lets illicit flows slip through. Korea's own zero-threshold rule takes effect August 2026, and FATF's next assessment is due soon.
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South Korea’s Financial Intelligence Unit used the June FATF plenary in Paris to push for a global elimination of the Travel Rule’s minimum transaction threshold. Director Lee Hyung-joo told the 34th session that the current $730 floor (1 million won) creates regulatory gaps that let illicit flows slip through small transfers, according to Asia Business Daily.
The proposal has three prongs. First, the Travel Rule should apply to both the sending and receiving virtual asset service provider, not just the originator. Second, the rule should cover every transaction, no matter how small. Third, FATF members should consider outright transaction restrictions against high-risk, unregistered VASPs, paired with stronger customer due diligence.
Lee framed the problem as structural fragmentation. “Licensing and registration requirements, supervision methods, and approaches to offshore virtual asset service providers differ by jurisdiction, resulting in regulatory arbitrage,” he said, per Asia Business Daily. That fragmentation, he argued, weakens anti-money-laundering and counter-terrorism financing measures across borders.
South Korea is already moving on its own. An amendment to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information will lower the Travel Rule threshold from 1 million won to zero, effective August 20, 2026, pending Ministry of Legislation review, Maeil Business Newspaper reported.
The August revision went through its own friction. When the FIU first proposed the changes in March, it also included mandatory suspicious-transaction reporting for any virtual asset transfer above 10 million won to overseas exchanges or personal wallets. Domestic exchanges pushed back. The Digital Asset Exchange Joint Council, which represents Korea’s major exchanges, submitted an objection arguing that a fixed-amount reporting requirement would be burdensome and ineffective within risk-based monitoring programs. After meeting with exchange officials via DAXA, the FIU dropped the fixed-amount idea and moved toward a risk-based approach where operators set their own criteria.