[Drug Nation]⑫Half of Drug Money Laundered...16 Trillion Won in Korea

■ Chapter 3. National Economies Shaken by the Drug Economy


Virtual Asset Transactions Enable Money Laundering Beyond Central Controls

Beyond Simple Trafficking: Threatening the Global Financial Order

An Estimated 1,000 Trillion Won in Drug Money Laundered Worldwide

It is estimated that 'half' of the criminal proceeds generated by global cross-border drug organizations are laundered. This is the result of using virtual assets designed to bypass the central control of governments and financial institutions. Globally, it is estimated that 1,000 trillion won, and in Korea alone, 16 trillion won in drug money has been laundered and reintegrated into the legal economy. This is similar to half the size of the domestic drug market, which The Asia Business Daily estimates to be worth 33 trillion won.

Criminal organizations utilize this structure to expand the underground economy and reinvest in further criminal activities. Experts warn that drug-related crimes have reached a point where they not only involve simple trafficking and distribution, but also threaten the global financial order.

Half of Drug Money Laundered...16 Trillion Won Laundered in Korea, Estimates Show

According to the Global Initiative Against Transnational Organized Crime (GIF), a global non-profit think tank, on May 20, the global drug trafficking market was estimated to reach up to 1.44 trillion dollars last year—approximately 2,110 trillion won.

Nearly half of the more than 2,000 trillion won in drug money is believed to have been laundered. The most widely cited figure regarding the scale of money laundering from crime is the "consensus range" released by the International Monetary Fund (IMF) in 1998. This analysis found that 'black money' generated from crime accounts for about 2–5% of global gross domestic product (GDP).

The United Nations Office on Drugs and Crime (UNODC) has increased accuracy by aggregating various estimates. The most credible estimate of the amount of money that can be laundered through the financial system is 2.7% (ranging from 2.1% to 4.0%) of global GDP. Of this, drug-related crime accounts for about 0.6%.

Last year, global GDP stood at 117.1654 trillion dollars. Applying the average won-dollar exchange rate of 1,416 won for last year, this converts to 1,659.06 quadrillion won. The total global scale of criminal money laundering (2.7%) is estimated at 4,479.4676 trillion won, and the amount of laundered proceeds from drug-related crime is expected to reach 995.4372 trillion won. This is close to half the size of the global drug market analyzed by GIF, which is around 2,110 trillion won.

Applying this to Korea, the estimated potential size of the domestic drug market—33 trillion won, according to The Asia Business Daily—is also nearly half. According to the Bank of Korea, Korea's nominal GDP last year was 2,663.3426 trillion won, and 0.6% of this is 15.9801 trillion won. The development cost of the KF-21 Boramae, excluding armaments, is 8.1 trillion won. This means that enough drug money is being laundered in Korea to fund the domestic fighter jet development project twice over.

Virtual Assets Outside of Controls, Core Means of Drug Money Laundering

Pak Wangyeol, formerly of Telegram Worldwide, who was detained in the Philippines, was repatriated through Incheon International Airport Terminal 2 last April. Photo by Jinhyung Kang

Drug-related crime has a massive impact on the global economy and organized crime networks. Drug organizations are neutralizing the formal financial system through highly sophisticated money laundering techniques. They have reached a stage where they not only conceal funds but also reinfiltrate the legitimate economic system and disrupt the financial order itself.

Criminal organizations use virtual assets as a primary means of money laundering. Techniques such as "mixing" and "tumbling," which split and mix funds across thousands of wallet addresses to make their origins untraceable, are designed to fundamentally block law enforcement tracking. A police official explained, "Dark coins like Monero, whose transaction history cannot be checked, are used as a kind of intermediary stopover, severing links in the flow of funds."

According to law enforcement and intelligence agencies, drug organizations' funds are also disguised as "trade payments" to penetrate the legitimate economy. This involves issuing fake invoices or inflating import and export payments, making criminal proceeds from drugs appear to be legitimate transaction payments. An intelligence official stated, "When virtual assets are converted into gold, jewelry, real estate, or other tangible assets through over-the-counter brokers, even the nature of the capital itself is laundered."

Laundered Money Fuels Other Crimes... "Undermining the Economic Foundation"

UNODC analyzes that drug money is funneled into the formal financial system through three stages: placement, layering, and integration. After severing direct links to the crime, the funds are disguised or mixed, and ultimately provided to sources that appear legitimate.

Experts have expressed concern that laundered money can be funneled into other crimes, thereby undermining the foundation of the economy. Hwang Seokjin, a professor at the Graduate School of International Information Security at Dongguk University, stated, "Because most criminal funds have shifted to virtual assets, it has become difficult to estimate the exact scale or track their flow. As the amount of laundered funds increases, it can distort market capital flows and even weaken the tax base."

Yoon Haesung, senior research fellow at the Korea Institute of Criminology and Justice, said, "As profits from drug trafficking increase, not only is the national economy eroded, but the fostering of criminal organizations can also expand." He added, "It is urgent for the country to strengthen the functions of intelligence agencies, and the response to borderless cybercrime, as seen in developed countries like the United States and the United Kingdom, is being delayed far too long."

Special Reporting Team｜Jang Heejoon, Oh Jieun, Park Hosu, Lee Jiye, and Park Jaehyun

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