Korea Tightens Crypto Transfer Rules for Overseas Exchanges and Personal Wallets

South Korea's Financial Intelligence Unit (FIU) has introduced new regulations for domestic virtual-asset service providers when it comes to transferring cryptocurrencies to and from overseas exchanges and personal wallets.

The revised rules require these providers to assess the anti-money laundering controls of overseas operators before establishing a business relationship, and to periodically reassess them while the relationship is maintained.

Transfers may be permitted following a risk assessment if the overseas operator meets certain criteria, such as being based in a country that effectively implements Financial Action Task Force recommendations, meeting obligations comparable to those in South Korea on customer due diligence and suspicious transaction reporting, and holding the required licenses and approvals.

However, transfers are restricted with operators based in high-risk countries designated by the FATF or without required licenses until the relevant risks are resolved. For overseas operators that do not fall under those high-risk criteria but still fail to meet all approval requirements, transfers are allowed only when the customer and the person sending or receiving the virtual asset are the same.

The FIU has also codified standards for transactions involving personal wallets. If money-laundering risk is deemed significantly elevated, the transaction must be restricted. Even when that is not the case, transfers are, in principle, allowed only when the exchange customer and the owner of the personal wallet are the same person.