South Korea's FIU or abandons the mandatory STR reporting requirement for large virtual asset transfers; the expansion plan for the Travel Rule continues to be pushed forward.

Deep Tide TechFlow Update — On May 30, according to ZDNet Korea, the Financial Intelligence Unit of Korea (FIU) has temporarily decided not to proceed with a controversial provision in the amendment to the “Specific Financial Information Act.” The provision, which was originally scheduled to require that when users transfer virtual assets valued at more than 10 million Korean won (about $7,300) to overseas accounts or personal wallets, the relevant institutions must submit Suspicious Transaction Reports (STR).

Previously, the Korea Digital Asset Exchange Association (DAXA) had offered comments on the proposal, saying that a mandatory reporting mechanism could increase compliance costs for trading platforms and lead to longer user fund-transfer processes, placing an additional burden on industry operations.

Nevertheless, the FIU will continue to push forward with the Travel Rule regulatory expansion plan. Under the arrangement, the regulatory scope will expand from virtual-asset transfers currently applicable to transfers of more than 1 million Korean won to transactions below 1 million Korean won (about $730), in order to enhance transparency and traceability of the flow of digital-asset funds.

The Travel Rule is an important component of the global anti-money laundering (AML) framework. It requires virtual asset service providers to share information about the sender and the receiver during transfers. Korean regulators continue to promote the improvement of related rules to strengthen oversight of the digital asset market.