Korea Customs Service Launches Special Crackdown on Criminal Fund Money Laundering

The government is launching a special crackdown on activities such as money laundering of criminal funds.

On November 17, the Korea Customs Service announced that, starting this month, it will conduct a special crackdown on illegal cross-border fund transfers that violate the Foreign Exchange Transactions Act and other laws, as well as on money laundering activities that disguise criminal proceeds as legitimate funds by exploiting trade and financial channels.

Provided by Korea Customs Service

This special crackdown is being conducted in response to the recent increase in crimes such as voice phishing, cyber fraud, illegal gambling, and drug offenses, which are based overseas, particularly in Southeast Asia.

Proceeds from cross-border crimes are transferred to overseas bases, serving as a core source of power for criminal organizations. In this process, illegal remittance methods such as hwanchigi (underground banking), unauthorized carrying of foreign currency across borders, and money laundering disguised as trade transactions are exploited as means of illicit fund distribution and concealment.

Accordingly, the Korea Customs Service plans to focus its efforts on intercepting illegal fund distribution and concealment methods at the border, minimizing financial losses to crime victims, blocking the acquisition of criminal proceeds, and dismantling the ecosystem of transnational crime.

The special crackdown will focus on blocking three types of illegal trade and foreign exchange activities that serve as major means for transnational crime: illegal remittances, smuggling of foreign currency, and money laundering through abuse of trade.

First, the Korea Customs Service will strengthen its crackdown on hwanchigi. Hwanchigi is a representative method of illegal fund distribution and concealment, with the scale of crimes uncovered over the past five years reaching 11 trillion won. Notably, the proportion of hwanchigi crimes involving virtual assets is as high as 83%, indicating frequent attempts to evade crackdowns by exploiting anonymity.

In response, the Korea Customs Service plans to utilize risk information (STR) provided by the Financial Intelligence Unit (FIU) to analyze high-risk illegal transactions and conduct extensive investigations into suspects involved in hwanchigi using virtual assets.

Additionally, the agency will strengthen its crackdown on remittance activities by professional foreign exchange operators, such as currency exchangers and small remittance service providers, that exceed the legally permitted scope under the Foreign Exchange Transactions Act.

To prevent the smuggling of currency, inspections will be intensified at airports and seaports nationwide to detect travelers from high-risk countries attempting to conceal and carry out currency, and to crack down on the import of counterfeit currency, checks, and other securities that may be used in domestic fraud.

The scale of foreign currency smuggling through airports and seaports has been steadily increasing in recent years. This year, a criminal organization was caught attempting to smuggle 115 billion won in overseas gambling funds out of the country.

Trade-based money laundering (TBML) through price manipulation and violations of the Foreign Exchange Transactions Act involving money laundering using overseas ATMs are also included in the scope of the special crackdown. The rationale is that such activities can disguise criminal proceeds as legitimate funds, thereby strengthening the drivers of crime.

During the special crackdown, the Korea Customs Service will analyze financial data such as trade transactions and overseas cash withdrawal records to identify individuals and corporations likely to be connected to criminal organization money laundering, and will investigate them for suspected money laundering and related offenses.

Lee Myunggu, Commissioner of the Korea Customs Service, stated, "Transnational crime is extremely harmful to society and requires a concentrated national effort, which is why we are conducting this special crackdown. The Korea Customs Service will continue to strengthen enforcement to prevent illegal fund distribution and concealment."

Meanwhile, to support the special crackdown, the Korea Customs Service has organized and is operating a 126-member 'Criminal Proceeds Tracking Team' led by the Director of the Foreign Exchange Investigation Division.

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