South Korea Overhauls Oversight of Overseas Crypto Transfers

The Financial Services Commission (FSC) pivoted from an earlier proposal that would have automatically flagged every transfer over 10 million won as suspicious. Following industry feedback, the final decree shifts the burden to individual exchanges, which must now develop internal risk assessment systems to distinguish between low-risk international counterparts and high-risk entities. Exchanges retain the authority to block transactions involving high-risk recipients or mandate additional documentation, such as proof of ownership for overseas accounts.

These measures coincide with stricter gatekeeping on mobile app stores. Google now requires all crypto platforms targeting the Korean market to hold a valid VASP registration with the Korea Financial Intelligence Unit. This policy led to the removal of several offshore exchange apps, including Bybit and MEXC, from the local Google Play Store in July. While these app-store restrictions operate independently of the new AML decree, both signal a broader push to centralize oversight of crypto liquidity.

Compliance requirements will not take effect until six months after the official promulgation of the decree. This grace period allows domestic exchanges to build the necessary verification infrastructure. While regulators aim to curb money laundering, industry participants warn that overly aggressive restrictions could inadvertently drive users toward unofficial, peer-to-peer channels, potentially complicating the very oversight the government seeks to establish.