In line with FATF guidance, South Korea amended its Act on Reporting and Using Specified Financial Transaction Information to require virtual asset service providers (VASPs) to register with the local financial regulator, Financial Services Commission (FSC), before undertaking business operations. The amended act also mandated the crypto Travel Rule for international virtual asset transfers over 1 million won (~USD 842). Learn more below.
1. Is cryptocurrency legal in South Korea?
Cryptocurrencies are allowed for use but are not considered legal tender in South Korea.
2. Are there any AML crypto regulations in South Korea?
Yes. The FSC revised Korea’s Anti-Money Laundering-related law, the Act on Reporting and Using Specified Financial Transaction Information (FTRA), in March 2021. The modification requires VASPs to register with the Korea Financial Intelligence Unit (KoFIU) and comply with various AML obligations, such as filing reports on suspicious transactions and verifying the identity of their customers.
3. Is the Crypto Travel Rule mandated in South Korea?
South Korea manded AML requirements similar to the crypto Travel Rule. The FSC revised the Anti-Money Laundering-related law, the Act on Reporting and Using Specified Financial Transaction Information Requirements of Virtual Asset Service Providers, which subjects VASPs to the AML requirements.
4. Who regulates cryptocurrency in South Korea?
The Financial Services Commission (FSC)is the primary authority responsible for supervising VASP compliance with AML/CFT obligations.
FATF Travel Rule requirements in South Korea
1. Are there licensing or registration requirements for VASPs in South Korea?
Yes. Korea’s recently amended Anti-Money Laundering-related law, The Act on Reporting and Using Specified Financial Transaction Information, indicates that VASPs must register with the Korea Financial Intelligence Unit (KoFIU) by September 24, 2021.
Among other requirements, To register with the KoFIU, VASPs must
- Acquire an Information Security Management Systems (ISMS) certification from the Korea Internet and Security Agency (KISA),
- Use real-name bank accounts for money remittance between the VASPs and their users.
2. When does the Crypto Travel Rule go into effect in South Korea?
Domestic and foreign VASPs must register with the KoFIU and comply with AML requirements by March 25, 2021.
3. Does South Korea permit a grace period to comply with the Crypto Travel Rule?
The amended Act on Reporting and Using Specified Financial Transaction Information was enacted on March 25, 2021; however, all VASPs were given a six-month grace period to comply till September 2021.
Complying with the FATF Crypto Travel Rule in South Korea
1. What is the minimum threshold for the Crypto Travel Rule in South Korea?
Under the Financial Transaction Reports Act (FTRA), the threshold differs depending on the type of transaction, ranging from KRW 1 million (~USD 880) to KRW 3 million (~USD 2640.)
2. What personally identifiable information is required to be shared for the crypto Travel Rule in South Korea?
Originator Customer PII:
- Wallet address
Beneficiary Customer PII:
- Wallet address
Upon request of the Beneficiary VASP or official authorities, the Originator VASP must provide the following information within three (3) business days:
- Originator’s official personal document identity number,
- Customer identification number, or
- Alien card registration number.
3. What are the non-custodial or self-hosted wallet requirements in South Korea?
Currently, there are no requirements for transfers to and from non-custodial or self-hosted wallets.
Why choose Notabene for crypto Travel Rule compliance in South Korea?
Korean VASPs and global VASPs targeting users in Korea should consider a risk-based approach to crypto compliance. Notabene helps VASPs and financial institutions comply with the Amendment to the Act on Reporting and Use of Certain Financial Transaction Information, closely related to the FATF’s Recommendation 16 “crypto Travel Rule” as required by the Financial Services Commission (FSC.)