A crackdown by the Korea Customs Service on domestic high-risk general currency exchange offices has uncovered illegal activities at 61 companies.
On the 13th, the Korea Customs Service announced that it selected 127 high-risk general currency exchange offices out of 1,409 domestic exchange companies and conducted intensive inspections from March to May.
This crackdown was initiated because the likelihood of exchange companies engaging in illegal activities such as illicit currency exchange, virtual asset misused 'hwanchigi' remittances and receipts, tax evasion, money laundering, and domestic and international wealth concealment had increased.
In August last year, a currency exchange office was discovered to have facilitated illegal receipts of trade funds worth 205.5 billion won obtained through the smuggling of copper scrap using virtual assets. Additionally, this month, an illegal remittance of 58 billion won between Korea and Russia using fintech and virtual assets was uncovered.
The focus of the intensive crackdown was on high-risk exchange offices with ▲ past records of illegal activities ▲ repeated failures to report exchange transactions ▲ those located in foreigner-concentrated areas like Daelim, Ansan, and Siheung with high potential for illegal activities.
Illegal activities were detected in all 61 companies, with types including ▲ breach of business operation standards such as failure to prepare exchange ledgers and non-use of exchange certificates (17 companies) ▲ violation of registration requirements such as inadequate business premises (27 companies) ▲ false entries in exchange ledgers (8 companies) ▲ failure to submit or report exchange ledgers (10 companies) ▲ illegal 'hwanchigi' remittances and receipts (6 companies).
The Korea Customs Service imposed suspension of operations on 30 locations. It also enforced administrative sanctions such as cancellation of registration (3 locations), warnings (20 locations), corrective orders (5 locations), and fines (18 locations).
Notably, the crackdown further identified cases where individuals facilitated remittances of export and import payments, such as for used cars, through 'hwanchigi' methods or registered exchange offices under the names of naturalized citizens instead of their own for continuous illegal 'hwanchigi' activities.
The Korea Customs Service plans to conduct additional investigations on those who ordered 'hwanchigi' to determine the link between illegal remittances and receipts with the purpose of 'hwanchigi', tax evasion, money laundering, and asset flight.
Of the 61 detected cases, 69% (42 locations) were operated by Koreans. The remaining 31% (19 locations) were operated by foreigners.
The Korea Customs Service noted, "As cases of street currency exchange offices being exploited as channels for illegal money laundering through virtual assets continue to be detected, we will thoroughly crack down on illegal activities like 'hwanchigi' through rigorous measures such as executing warrants and criminal investigations."