Caught Buying Real Estate with Company Funds in 'Ghost Company' Money Laundering Scheme

A trading company was caught by customs authorities for establishing a ghost company (paper company) without a real entity to launder money and using it for real estate purchases.

The Busan Regional Customs Office of the Korea Customs Service announced on the 17th that it had reported trading company A to the prosecution on charges of violating the Customs Act and the Act on the Regulation and Punishment of Criminal Proceeds Concealment.

Provided by Korea Customs Service

According to customs, Company A directly exported packaging materials to Europe while setting up a paper company in Hong Kong and pretending that the entity was conducting intermediary trade.

They also underreported export prices, and it was revealed that the difference between the actual export payment and the underreported export payment was siphoned off to Hong Kong.

The company funds embezzled through this method amounted to 2.5 billion KRW, some of which were used for real estate purchases. CEO B of Company A dispersed the company funds (trade transaction profits) into about 40 nominee accounts belonging to family and acquaintances and laundered the money back into Korea.

In fact, customs confirmed that B evaded taxes on trade transaction profits for nine years since 2013, and especially during the period when real estate prices surged in 2019, some of the company funds were used to purchase apartments in the metropolitan area.

During the investigation, customs also uncovered that when Company A was under tax audit by the National Tax Service in 2019 for offshore tax evasion, they falsified documents such as office lease contracts and investment contracts of the Hong Kong paper company to avoid corporate and personal income tax assessments.

Accordingly, before prosecuting B, customs applied for seizure preservation (a court order that prevents disposal of criminal proceeds during trial) to prevent the arbitrary disposal of the apartment and notified the National Tax Service of the tax evasion.

Ko Seok-jin, head of Busan Customs, said, "We will strengthen information collection and analysis to respond to crimes such as money laundering by establishing paper companies in tax havens like Hong Kong," and added, "Above all, we will actively respond to ensure that criminal proceeds generated from illegal activities do not actually belong to the perpetrators and can be recovered."

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