South Korea's crypto exchanges warn of compliance chaos under new AML rules
South Korea’s crypto industry is raising concerns over proposed anti-money laundering rules. The Digital Asset eXchange Alliance (DAXA) warns that stricter reporting duties could overwhelm local exchanges with millions of extra compliance tasks. Regulators introduced the changes in March, with final decisions expected by July. The Financial Services Commission and the Financial Intelligence Unit (FIU) put forward the amendments in March. A public consultation period closed on May 11. If approved, the rules would require virtual asset service providers to flag all overseas-linked transfers of 10 million won or more as suspicious.
DAXA argues that the proposal goes beyond standard-setting and imposes new reporting burdens through lower-level regulations. The group also opposes a duty to verify customer information, claiming it lacks clear legal backing. According to DAXA, customer verification failures could lead to harsher penalties for crypto firms—including business suspension—compared to other financial institutions. The alliance estimates that suspicious transaction reports could surge from 63,408 to over 5.4 million cases—a nearly 85-fold increase. The rules also aim to tighten checks on overseas virtual asset providers, forcing exchanges to balance compliance with fast-moving global transactions. Some provisions would take effect on August 20, while others would roll out in phases from January to August next year. The debate follows ongoing legal challenges by South Korean exchanges against FIU sanctions. Cases involving major platforms like Dunamu, Bithumb, and Coinone remain unresolved in court.
The proposed rules are set to finalise around July, with exchanges already facing compliance pressures. If implemented, the changes would drastically increase reporting demands, particularly for overseas transactions. Industry groups continue to push back, citing disproportionate penalties and operational strain.
