Foreigners' 'Suspicious' Acquisition of Seoul Apartments... Using Bitcoin and Other Currency Laundering Methods

Diagram of remittance routes using virtual assets. Provided by the Korea Customs Service.

[Asia Economy (Daejeon) Reporter Jeong Il-woong] #Chinese national Mr. C purchased an apartment worth approximately 1.1 billion KRW by combining funds he brought into the country over 11 occasions from January to February 2018 with domestic bank loan funds. The problem lies in the route through which the funds were brought in. The process Mr. C used involved a hawala system utilizing cryptocurrency. When Mr. C deposited yuan into the hawala organization's account in China, the hawala group purchased virtual assets such as Bitcoin in China and then transferred the funds to Mr. C through an associate in Korea.

Foreigners like Mr. C who illegally brought funds into the country and acquired apartments in Seoul have been caught in large numbers by government crackdowns.

The Seoul Regional Customs Office of the Korea Customs Service, in cooperation with the Ministry of Land, Infrastructure and Transport, announced on the 27th that after investigating about 500 foreigners who purchased apartments in Seoul over the past three years with unclear sources of funds, it confirmed that 61 foreigners acquired apartments through illegal means.

The total number of apartments acquired by these foreigners is 55, with acquisition amounts reaching 84 billion KRW.

The nationalities of the foreigners caught are 34 Chinese, 19 Americans, 2 Australians, and 6 from other countries. The areas where they purchased apartments include Gangnam-gu (13 cases, acquisition amount 31.5 billion KRW), Yeongdeungpo-gu (6 cases, 4.6 billion KRW), Guro-gu (5 cases, 3.2 billion KRW), Seocho-gu (5 cases, 10.2 billion KRW), Songpa-gu (4 cases, 5.7 billion KRW), and Mapo-gu (4 cases, 4.9 billion KRW).

By type of crime, 17 individuals created criminal funds through hawala and customs evasion while purchasing 16 apartments worth approximately 17.6 billion KRW.

The remaining 44 individuals purchased 39 apartments worth about 66.4 billion KRW without reporting the real estate acquisition to the foreign exchange authorities.

Data on penalty standards related to illegal inflow of funds for apartment acquisition by foreigners, jointly uncovered by the Korea Customs Service and the Ministry of Land, Infrastructure and Transport. Provided by the Korea Customs Service

Non-resident foreigners who acquire domestic real estate are required by Article 18 of the Foreign Exchange Transactions Act to report capital transactions to the head of a foreign exchange bank or the Bank of Korea. These individuals violated this law.

Currently, customs authorities are reportedly conducting additional investigations on 37 foreigners for the same charge (non-reporting).

Most notably, customs authorities are focusing on the emergence of new hawala methods using virtual assets such as Bitcoin in the cases uncovered.

The hawala organizations that acted as illegal fund transfer channels for foreigners purchasing apartments in Seoul have been identified as 10 groups, with the estimated amount of illegally transferred funds reaching 1.4 trillion KRW. Customs authorities are currently tracking these organizations to apprehend them.

A representative from the Seoul Customs Office of the Korea Customs Service stated, “We obtained intelligence on illegal fund inflows and real estate acquisitions by foreigners and conducted a four-month joint investigation with the Ministry of Land, Infrastructure and Transport, uncovering numerous cases of illegal apartment acquisitions in Seoul by foreigners. Investigations are ongoing against 10 hawala organizations that facilitated illegal fund inflows for real estate purchases, and we plan to announce the details once the investigations are complete.”

He added, “For foreigners who failed to report real estate acquisitions to the foreign exchange authorities, depending on the size and nature of the transaction amount, we plan to refer cases to the prosecution, impose fines, or notify related agencies such as the Financial Supervisory Service. The Foreign Exchange Transactions Act stipulates criminal penalties of up to one year imprisonment or fines up to 100 million KRW for unreported capital transactions exceeding 1 billion KRW, and fines ranging from 2% to 4% of the unreported amount for transactions under 1 billion KRW.”

Diagram illustrating the flow of crime proceeds from foreigners through low-cost mask exports and apartment acquisition routes. Provided by the Korea Customs Service.

Diagram illustrating the generation of criminal proceeds by foreigners through low-cost clothing imports and the acquisition routes of apartments. Provided by the Korea Customs Service.

This content was produced with the assistance of AI translation services.