Crackdown on unlicensed money changers yields sanctions against 47 operators, targeting transnational crime financing
A customs crackdown on illegal currency swapping aimed at cutting off transnational crime financing has uncovered unlawful activity at 47 currency exchange operators.
The Korea Customs Service said Tuesday it selected 104 operators from a total of 1,320 registered currency exchange businesses nationwide as of the end of June and conducted an intensive inspection from March, detecting violations at 47 operators and imposing business suspension orders, fines and other sanctions.
The customs service conducts two rounds of intensive inspections of currency exchange operators each year, covering the first and second halves. This first-half crackdown was carried out to stamp out illegal practices and prevent exchange shops from being exploited as conduits for transnational crime proceeds, including voice phishing revenues.
Inspectors focused on falsified exchange ledgers and compliance with reporting and notification obligations tied to transaction amounts, uncovering 63 violations across the 47 operators.
The violations included: failures to maintain exchange ledgers or use required exchange certificates and other breaches of operational standards at 13 operators; falsified or unsubmitted exchange ledgers at 34 operators; exceeding sales limits at 8 operators; a registration requirement violation at 1 operator; failure to report purchases exceeding $10,000 at 2 operators; and failure to file currency transaction reports (CTRs) as required under the Act on Reporting and Using Specified Financial Transaction Information at 5 operators.
Administrative sanctions included business suspensions for 3 operators, fines for 27, warnings for 42 and corrective orders for 2. The five operators that failed to file CTRs are to be referred to the Financial Intelligence Unit.
An amendment to the Foreign Exchange Transactions Act taking effect Dec. 3 explicitly allows for administrative measures — including registration cancellation — against licensed foreign exchange businesses, including currency exchange operators, that conduct foreign exchange activities outside their permitted scope. Under the amended law, the Korea Customs Service plans to take immediate action against currency swapping by exchange operators in future crackdowns.
Jo Han-jin, head of the customs service's foreign exchange investigation division, said illegal virtual asset exchanges have been spreading across Seoul, including in Myeong-dong and Gangnam, and that methods used by exchange shops for illegal currency swapping have diversified to include mobile payment platforms such as WeChat Pay and Alipay. "We plan to concentrate our in-house intelligence analysis capabilities and work with relevant agencies to take active measures to cut off the flow of transnational crime funds involving virtual assets," he said.
Jo added that the agency would take strict action through criminal investigations against exchange operators engaged in illegal currency swapping, and that if the funds involved are linked to illegal activities — including tax evasion, money laundering or capital flight — investigators would pursue additional probes into the clients who commissioned the transactions.
kwonhl@heraldcorp.com
