South Korea Detains 16 Suspects in Connection to Illegal Foreign Transactions

The use of cryptocurrencies to perpetrate financial scams, especially across foreign territories has been on the rise in South Korea lately. 

Results from conducted research and available data have shown that over 75% of financial crimes and violations of South Korea’s Foreign Exchange Transactions Act this year involve the use of digital assets. These violations are worth about $1.1 billion.

South Korea’s customs officers have arrested sixteen persons suspected to be part of illegal foreign exchange transactions. 

Collectively, the worth of crypto transacted by them is around $2 billion. Out of the sixteen suspects, two have been sent to be persecuted, seven others were only filed for negligence on their part while the other seven are still being probed. 

In February when the customs got wind of the continuity and volume of illicit foreign exchange transactions conducted in the country with the use of virtual digital assets, it started an investigation, armed with foreign data provided by the Financial Intelligence Unit (FIU). During the investigations, it was discovered that virtual asset exchanges located across the world were at the core of these crimes.

According to a Seoul local news outlet, the practice of illegally transacting funds between South Korea and overseas is regarded as “hwanchigi.” Therefore, many of the crimes perpetrated by these sixteen suspects are linked to hwanchigi.

Foreign Exchange Crimes Take Different Forms

News reports showed that trade money disguised remittance, in which a paper company was established and disguised as trade proceeds, was the largest at 1.304 trillion won. 

Illegal remittance agency, which receives funds from overseas virtual asset purchasers and disguises trade proceeds through a bank, and collects commissions, followed by 380 billion won, and transferred virtual assets purchased overseas and sold them. The so-called ‘hwanchigi’ method also amounted to 318.8 billion won, and there were various types and methods.”

Notably, the apprehended suspects are higher institution students, investors, and representatives of many trading companies. 

There are also speculations that a bank employee is involved in this act. When the investigation has finally been concluded, some of the suspects might be charged with money laundering as well as fleeing foreign property as construed by Korean Custom Services.

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