"Illegal Foreign Exchange Transactions Worth 2 Trillion Won in Virtual Assets Targeting Capital Gains Detected"

A diagram illustrating a case where funds were sent overseas under the pretense of trade payments (false documentation) with the intent of gaining capital gains through virtual assets. Provided by the Korea Customs Service.

[Asia Economy (Daejeon) Reporter Jeong Il-woong] #Mr. A established multiple ghost companies in Korea under acquaintances' names and then pretended to import cosmetics, openly remitting foreign currency overseas through banks. He embezzled funds overseas under the pretext of paying import trade payments. Afterwards, Mr. A purchased virtual assets on overseas exchanges and transferred them to domestic electronic wallets, repeatedly selling them on domestic exchanges hundreds of times. The price difference profit Mr. A gained in this process amounted to approximately 5 billion KRW. Customs authorities caught Mr. A’s actions and imposed a fine of about 11 billion KRW for violating the Foreign Exchange Transactions Act (Article 15, false documentation).

Illegal foreign exchange transactions exceeding 2 trillion KRW, including new types of hawala using virtual assets, were uncovered by customs authorities.

Seoul Main Customs announced on the 30th that since February, it has conducted a “planned investigation into illegal foreign exchange transactions related to virtual assets” and uncovered illegal foreign exchange transactions totaling 2.0715 trillion KRW.

The planned investigation focused on cracking down on cases like Mr. A’s, who disguised trade payments to illegally remit foreign currency for virtual asset trading purposes and then withdrew funds locally overseas, as well as new types of hawala using virtual assets.

The main types detected during this process include ▲remitting funds disguised as trade payments overseas through commercial banks to exploit price differences between domestic and foreign virtual assets (trade payment disguised remittance, totaling 1.304 trillion KRW) ▲performing unregistered foreign exchange business by resending virtual assets purchased overseas to Korea, selling them, and then paying funds to specific individuals (remittance and receipt agency business, 318.8 billion KRW) ▲receiving funds from those wishing to purchase overseas assets, acting as an agent for remittances disguised as trade payments through banks, and collecting fees (illegal remittance agency, 380 billion KRW) ▲exploiting price differences of domestic and foreign virtual assets by withdrawing foreign currency directly overseas after leaving the country to purchase virtual assets (illegal withdrawal, 68.7 billion KRW).

For example, Mr. B, who resides overseas, is suspected of receiving local currency from clients wishing to remit money to Korea, purchasing virtual assets through overseas exchanges, transferring them to his own electronic wallet operating an unregistered exchange in Korea, and selling them to deliver the proceeds to clients via account transfer or cash.

Also, university student Mr. C is under investigation for using hundreds of domestic bank debit (check) cards issued under his and acquaintances’ names to withdraw foreign currency overseas, purchasing virtual assets with the withdrawn foreign currency on overseas exchanges, transferring them to his domestic electronic wallet, and selling them on domestic exchanges to profit from price differences between domestic and foreign virtual assets.

In particular, following the planned investigation, the Korea Customs Service has formed a “dedicated investigation team” to investigate whether 23 companies referred by the Financial Supervisory Service engaged in foreign exchange transactions. The dedicated investigation team will work in cooperation with the Seoul Central District Prosecutors’ Office and the Financial Supervisory Service to focus on violations of the Foreign Exchange Transactions Act, overseas asset concealment, and money laundering by these companies.

Lee Min-geun, Director of Investigation Division 2 at Seoul Customs, said, “Foreign exchange transactions aimed at profiting from price differences between domestic and foreign virtual assets are highly likely to violate the Foreign Exchange Transactions Act,” adding, “Customs will continue to strictly respond with a zero-tolerance policy to foreign exchange crimes illegally conducted using virtual assets through such methods.”

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