South Korea Tightens VASP Registration and AML Rules for Crypto Transfers

South Korea has approved revised rules imposing stricter registration requirements and stronger anti-money laundering (AML) obligations on virtual asset service providers (VASPs).

The Financial Services Commission (FSC) said the government approved the revision to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information at a Cabinet meeting on August 11.

The revised rules expand scrutiny of VASP major shareholders to include the chief executive officer or controlling shareholder, as well as the largest shareholder and company representative when the largest shareholder is a corporate entity.

VASPs seeking registration must meet stricter financial and governance standards, including maintaining a debt ratio of 200% or below and having no recent defaults or regulatory licence revocations linked to financial law violations. Firms must also demonstrate adequate expertise, cybersecurity infrastructure and internal controls for AML and customer protection.

The rules significantly expand the existing Travel Rule. Previously applying to transfers of KRW1 million or more between registered VASPs, the requirement will cover transactions of all amounts. Recipient VASPs will also be required to obtain information about the sender.

Cross-border transfers between domestic VASPs and overseas VASPs or digital wallet providers will remain permitted under certain conditions, while high-risk transactions will be prohibited. Transfers of KRW10 million or more to overseas VASPs or wallet providers must be reported to the Korea Financial Intelligence Unit (KoFIU), regardless of the transaction’s risk level.

The revised rules also introduce stricter customer due diligence for high-risk customers, products and services.

Registration requirements and rules concerning sanctions against former VASP employees will take effect on August 20, 2026, while other amendments will become effective six months after promulgation. KoFIU and the Financial Supervisory Service (FSS) will hold an industry briefing on August 13.