South Korea’s Financial Intelligence Unit presented a series of proposals during the 34th FATF plenary session in Paris, held from June 15 to June 19. The recommendations focused on expanding the Crypto Travel Rule, strengthening oversight of unregistered platforms, and reducing regulatory inconsistencies that allow illicit actors to exploit gaps in global compliance frameworks.
The discussions come as FATF continues reviewing how member jurisdictions are implementing anti-money laundering standards for virtual assets, with recent assessments showing uneven compliance across major crypto markets.
South Korea Pushes for Broader Travel Rule Coverage
The centerpiece of South Korea’s proposal is an expansion of the Crypto Travel Rule, an international anti-money laundering standard that requires exchanges to collect and share sender and recipient information when digital assets are transferred.
Currently, South Korea applies the Travel Rule to crypto transfers exceeding 1 million won, or roughly $650. However, regulators argued that limiting compliance requirements to larger transfers creates blind spots that can be exploited by criminals.
The Financial Intelligence Unit proposed extending the rule to smaller transactions and encouraged FATF member states to consider removing minimum transaction thresholds altogether.
If adopted more broadly, exchanges would be required to verify and transmit customer information for a much larger volume of crypto transactions, increasing transparency but also expanding compliance obligations.
Regulators Want Both Sides of Transfers Covered
South Korean officials also argued that Travel Rule requirements should apply equally to both the sending and receiving service providers involved in a transaction.
The proposal aims to ensure that information follows a transaction throughout its entire lifecycle rather than being collected by only one party.
According to FIU Director Lee Hyung Joo, differences in licensing standards, registration requirements, supervisory practices, and oversight of offshore platforms continue to create opportunities for regulatory arbitrage.
He said:
“Licensing and registration requirements, supervision methods, and approaches to offshore virtual asset service providers differ by jurisdiction, resulting in regulatory arbitrage.
Lee Hyung Joo
Director – FIU
South Korea believes stronger coordination between jurisdictions is necessary to prevent illicit actors from exploiting weaker regulatory environments.