Travel rule (information provision obligation) requirements will now apply to virtual asset transactions under 1 million won. Controlling shareholders will be included in the review for virtual asset service provider registration. The Financial Intelligence Unit of the Financial Services Commission said on the 11th that the Cabinet approved an amendment to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information reflecting these changes.
Under the amendment, the travel rule, which requires providing information when transferring virtual assets, will apply to the full amount. The current decree requires a virtual asset service provider to provide relevant information to the receiving virtual asset service provider when transferring virtual assets equivalent to 1 million won or more.
The amendment removes this amount threshold and applies the travel rule to all transfer transactions regardless of amount. The step is meant to prevent so-called "split remittances," in which transactions are divided into amounts under 1 million won to evade rules. For example, going forward, the travel rule will also apply when purchasing 2 billion won worth of virtual assets and making 216 outbound transfers in units under 1 million won.
Transactions with overseas virtual asset service providers or personal wallets will also have different permission scopes depending on risk level. Transfers with low-risk overseas exchanges will be allowed, while other overseas exchanges and personal wallets will be approved only when senders and recipients are verified. Transactions classified as high risk will be prohibited. In particular, for transactions of 10 million won or more, providers must establish and operate their own suspicious transaction management systems.
The permission scope by risk level was set after confirming cases such as splitting virtual assets into units under 1 million won to send them to multiple personal wallets of unclear origin and then reconsolidating them into a specific wallet, or purchasing virtual assets with criminal proceeds and transferring them to a high-risk overseas exchange.
The review for virtual asset service provider registrations will also be strengthened. The scope of controlling shareholders subject to review will include shareholders who appointed a majority of the CEO or directors, and if the largest shareholder is a corporation, the corporation's largest shareholder and representative will also be subject to review.
Grounds for rejecting registrations were also detailed. A virtual asset service provider must have a sound financial condition, including a debt-to-equity ratio of 200% or less, and must not have undermined credit order through defaults, etc., in the past three years. Executives and representatives must meet the eligibility requirements under the Act on Corporate Governance of Financial Companies. In principle, registrations may also be rejected if there is a record of criminal punishment of a fine or higher for violations of anti-money laundering or financial-related laws.
Among the amendments, provisions related to the virtual asset service provider registration system and the notification of sanctions for retirees will take effect on the 20th. The remaining provisions, including the expanded travel rule, are set to take effect six months after promulgation. Financial authorities will revise the registration manual in time for implementation and, together with the Financial Supervisory Service (FSS), plan to hold public briefings for virtual asset service providers and businesses preparing to register.