South Korea Moves to Freeze High-Risk Crypto Accounts

South Korea’s Financial Services Commission (FSC) Chairman Lee Eok-won announced new measures to curb illicit activity in the cryptocurrency market. He made the remarks on November 28 during the 19th Anti-Money Laundering Day ceremony. His plan focuses on tightening anti-money-laundering controls and expanding the Travel Rule for virtual asset transactions.

Expansion of the Travel Rule

Lee plans to lower the transaction threshold for the Travel Rule to below ₩1 million (about USD 680). Currently, domestic exchanges collect sender and recipient information only for transfers above that amount. Criminals often split transfers to avoid identification. Therefore, authorities want to close this gap. Lee explained that the new rule will require exchanges to record details for smaller transactions as well.

Moreover, he committed to stronger enforcement efforts. “We will strictly crack down on money-laundering activities that exploit virtual asset transactions,” he said. In addition, the FSC will block transfers to overseas exchanges that present high risks.

Stronger Law Enforcement and Governance

Lee also outlined broader reforms designed to improve the governance of virtual asset operators. Under the new policy, individuals with criminal histories such as drug offenses or tax evasion will no longer qualify as major shareholders of crypto businesses. This approach supports an existing guideline that bars such individuals from ownership roles. Furthermore, authorities will introduce preemptive account suspensions to stop criminal fund movements before they occur.

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The government will expand the reporting review process for virtual asset business operators. Consequently, the review will now include financial soundness checks and social credit verification. These reforms require legislative changes. The FSC plans to finalize the proposal in the first half of next year and then submit amendments to the Specific Financial Information Act to the National Assembly.

Key Operational Measures

The Financial Intelligence Unit (FIU) will introduce a preemptive account freeze system. This tool will help the agency secure suspected criminal funds before they move through the financial system. However, Lee noted that the FIU will use this measure only in serious cases such as drug crimes and illegal gambling to reduce unnecessary inconvenience for the public.

Meanwhile, the FIU will strengthen its internal capacity to support the implementation of the new system. Internationally, South Korea plans to deepen cooperation with Southeast Asian FIUs to target cross-border crimes. The government will also prioritize efforts related to cyber fraud and terrorist financing. It intends to use next year’s FATF ministerial meeting as a platform for further cooperation.

Domestically, the FSC will work with lawyers, accountants, and tax specialists to reinforce anti-money-laundering standards across related industries. As a result, professional organizations will play a stronger role in compliance support.

Chairman Lee’s announcement marks a significant shift toward stricter regulation in South Korea’s virtual asset sector.

During the ceremony, the government honored seven organizations and 26 individuals for their work in anti-money laundering. Kakao Bank received the Presidential Citation, and Acuon Savings Bank received the Prime Minister’s Citation.