South Korea Scraps Travel Rule De Minimis Threshold

South Korea's Cabinet approved on 11 August the complete removal of the Travel Rule exemption for virtual asset transfers below ₩1,000,000 (approximately US$707). The decree was subsequently promulgated on 18 August, with the relevant provisions are expected to apply on February 19, 2027.

As an early mover in implementing the FATF Travel Rule, with its regime taking effect in March 2022, Virtual Asset Service Providers (VASPs) in South Korea were only required to transmit prescribed originator and beneficiary information for covered VASP-to-VASP transfers for transactions exceeding this 1 million won threshold. With the approved amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information, once the transfer rules take effect on February 19, 2027, registered VASPs will have to collect originator and beneficiary information regardless of the transaction size.

This Travel Rule enhancement comes amid the recent wave of FATF publications, including FATF’s July 2026 targeted update, highlighting the financial-crime risks involving virtual assets (VAs). In its seventh targeted update, the FATF underscored the need for supervisory attention to shift from rulemaking to the growing urgency of effective implementation and enforcement to tackle the escalating risks of VAs being exploited in sophisticated frauds and scams, among other typologies. Furthermore, the FATF highlighted the specific vulnerabilities created by offshore VASPs operating in jurisdictions with delayed or lax regulatory oversight. Criminals frequently exploit this uneven global implementation, routing fragmented, low-value transactions through non-compliant offshore entities to obfuscate the origins of stolen funds.

For Korean VASPs, compliance will therefore depend not only on collecting data, but on confidently identifying counterparties, determining whether they can receive and protect Travel Rule information, and applying proportionate controls where information is incomplete or a counterparty presents elevated risk. This becomes especially important for transfers across different jurisdictions, where regulatory expectations and technical capabilities may vary materially.

By mandating Travel Rule compliance for all VA transfers, regardless of value, South Korea is taking a proactive stance against cross-border jurisdictional arbitrage, as well as other techniques to circumvent monitoring. For example, authorities cited a case in which a user deposited about 200 million won into a cryptocurrency exchange and converted into stablecoins, and then broke down the withdrawals into 216 transactions, each below the existing 1 million won threshold.

Eliminating the threshold also changes the economics of compliance. Processes designed for occasional higher-value transfers must now operate reliably at scale across routine customer activity, with automated screening, data-quality checks, exception workflows, and audit-ready records built into the transaction flow.

For compliance teams at VASPs, the operational implications of this amendment are profound. Removing the reporting threshold means the volume of transactions subject to Travel Rule data requirements will increase materially. VASPs can no longer rely on threshold-dependent processes or manual reviews; but automated, highly scalable and robust compliance infrastructure to handle the surge in data transmission without degrading the end-user experience.

VerifyVASP can support this transition by helping VASPs exchange Travel Rule information securely with verified counterparties, manage cross-jurisdiction interoperability, and apply scalable controls for incomplete or higher-risk transfers. By embedding these capabilities into existing transaction workflows, platforms can prepare for a zero-threshold environment while maintaining a streamlined experience for legitimate users.

As zero-threshold approaches gain traction, VASPs will need compliance programs that are designed for universal coverage rather than threshold-based exceptions. VerifyVASP helps VASPs operationalise that shift through immediate and secure Travel Rule information exchange, counterparty connectivity, and scalable compliance workflows, supporting regulatory readiness without making every low-value transfer a manual compliance event.