South Korea pushes FATF to expand crypto travel rule to smaller transfers

In a major development with wide ramifications for digital asset sector, South Korea’s Financial Intelligence Unit (FIU) is calling on global regulators to close gaps in crypto anti-money laundering enforcement, proposing that the Financial Action Task Force’s(FATF) Travel Rule be extended to cover smaller crypto transfers.

The FIU raised its proposals during the 34th FATF plenary session held in Paris from June 15 to 19, where more than 200 member jurisdictions reviewed how well countries have implemented anti-money-laundering standards for virtual assets. According to the FIU, the review found that compliance overall remains insufficient, with countries handling the highest trading volumes of virtual assets ranking among the least compliant.

FIU Director Lee Hyung-joo laid out three linked recommendations on behalf of the Korean delegation. The Travel Rule, which requires exchanges to verify and share sender and recipient information during transfers, should apply to both the sending and receiving virtual asset service provider, not just one side of the transaction. Its scope should also extend below existing minimum thresholds to cover smaller transactions. And FATF members should consider outright transaction restrictions against high-risk, unregistered VASPs, paired with stronger customer due diligence requirements.

“Licensing and registration requirements, supervision methods, and approaches to offshore virtual asset service providers differ by jurisdiction, resulting in regulatory arbitrage,” he reportedly said. He argued that this fragmentation weakens anti-money-laundering and counter-terrorism financing efforts globally.

FATF also approved a new report examining risks associated with decentralized finance during the plenary, according to the FIU. Lee welcomed the report’s adoption while reiterating that regulatory arbitrage across jurisdictions stems primarily from differences in licensing, supervision and oversight of offshore platforms.

South Korea currently applies Travel Rule requirements to crypto transfers above 1 million won, roughly $650. The new proposal seeks to extend those obligations to transactions below that threshold. The FIU also called for the rule to apply to both originating and receiving crypto asset service providers to close gaps that currently allow cross-border transfers to slip through with incomplete information sharing.

The proposal forms part of broader discussions on FATF Recommendation 15, the international standard updated in 2019 to apply AML measures to crypto assets and crypto asset service providers. A 2025 targeted update from FATF found that global implementation of Recommendation 15 remains uneven seven years after the framework was extended to cover crypto assets.