Korea Customs Service scraps reward cap for smuggling, tax-evasion tips

South Korea's Korea Customs Service has scrapped all caps on reward payments for tips about smuggling and customs tax evasion, as illegal activities threatening state finances grow larger in scale and more sophisticated.

The agency said Monday it will begin enforcing a revised directive on processing smuggling reports and paying informant rewards, overhauling its payout system to encourage public participation in reporting customs crimes and protect both public safety and fiscal integrity.

The overhaul reflects the agency's recognition that tips from insiders or people close to criminal operations are often decisive in detecting increasingly covert and sophisticated offenses — including the smuggling and retail distribution of narcotics, firearms and bladed weapons, illegal food and pharmaceutical products, and counterfeit goods, as well as customs fraud through illicit quota-tariff recommendations and price manipulation.

The revised directive centers on four areas: abolishing the reward cap, expanding rewards for insider informants, introducing a progressive payout system, and extending rewards to small-value cases.

Under the first change, the previous caps — 150 million won ($108,000) for general smuggling and 300 million won for narcotics — have been eliminated entirely. The agency said removing the ceiling will allow it to offer adequate compensation to informants who help crack major violations such as large-scale drug smuggling, customs fraud and counterfeit-goods trafficking, and will encourage more people to come forward.

To counter increasingly covert and organized crime, rewards for insider tips will be raised from twice the standard amount to up to three times. The agency said raising the financial incentive for those with inside knowledge is intended to decisively deter covert criminal schemes.

The fixed-amount payout system, which had been based on the scale of a case, will be replaced with a progressive structure that accumulates rewards as a percentage of the amount seized. The change is designed to strengthen the link between case size and reward, ensuring that informants who report larger violations receive proportionally greater compensation.

The threshold for receiving a reward has also been lowered so that small-value cases, previously excluded from the program, now qualify. The agency said minor violations can provide critical leads in major investigations or serve as connecting information between cases, and that it does not want to miss any tip from the public, however small.

Under the revised system, rewards paid to smuggling informants for reports filed Monday onward are expected to increase substantially compared with previous levels.

As an example, the agency said that if someone tips off authorities about a drug trafficking organization attempting to smuggle 300 kilograms of methamphetamine — worth 30 billion won and enough for about 10 million simultaneous doses — hidden aboard a container ship from Vietnam, and the perpetrators are arrested as a result, the informant would receive 400 million won under the new system, up from 300 million won previously, which had been capped at that level. If the tip qualifies as an insider report, the reward could reach up to 1.2 billion won.

In another example, if a tip leads to the recovery of 2 billion won in evaded customs duties — involving a scheme in which retired workers and acquaintances were used to set up shell import companies to fraudulently obtain quota-tariff allocations and avoid paying the difference in duty rates — the informant would receive 200 million won, or 10 percent of the amount recovered, up from the previous cap of 50 million won. If the tip is recognized as an insider report, the reward could reach up to 600 million won.

Korea Customs Service Commissioner Lee Jong-wook said the reform is intended to "maximize the effectiveness of the informant reward program by abolishing the reward cap to raise incentives for tips on major cases, and by offering additional compensation for insider whistleblowing to block sophisticated covert crimes and tax evasion." He urged the public to "pay close attention and report any illegal or fraudulent activity to help eradicate wrongdoing and establish public safety and a fair economic order."