South Korean Crypto Exchanges Report Nearly 50% Surge in Suspicious Transactions in 2023

South Korea has witnessed a surge in crypto trading, particularly following a market recovery. Correspondingly, authorities in the country received almost 49% more alerts of potentially suspicious transactions from crypto service providers in 2023 compared to the previous year.

A paper from the Financial Intelligence Unit (FIU) revealed that South Korea logged 16,076 instances of reported crypto transactions suspected of links to activities like money laundering, market manipulation, or illicit drug trading in 2023.

In a recent press release, the FIU attributed this rise to improved communication with domestic companies, urging them to report such activities.

It also mentioned that the volume of reports linked to suspected crypto-related crimes surged by around 90% in 2023 compared to the previous year.

However, the agency refrained from providing specific information about these alerts, citing the Specified Financial Information Act. It also didn’t clarify whether these alerts also originated from crypto exchanges, similar to the suspicious transaction reports.

So far, the National Tax Service and the National Police Agency have received 100 instances of unregistered crypto loan enterprises.

These cases were flagged using suspicious transaction data collected by the FIU between December 2023 and January 2024.

Going forward, the FIU intends to implement a new system designed to promptly halt suspicious virtual asset transactions prior to investigation by local prosecutors. The primary aim of this system is to conduct preliminary testing for its implementation by March of this year.

Increased Scrutiny

The release of the report aligned with South Korea’s increased regulatory oversight of the space, triggered by several notable incidents of failure in 2023.

As part of an effort to enhance transparency and accountability within the public sector, senior public officials in the country are now required to disclose their digital asset holdings, as per new legislation announced by the Ministry of Personnel Management.

More recently, the Korea Customs Office disclosed that approximately 88% of illicit foreign exchange dealings involved digital assets, some using crypto to evade taxes. In response, the customs authority has established a specialized team aimed at combating cryptocurrency-related crimes.

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