South Korean Cryptocurrency Exchange Reports Nearly 50% Surge in Suspicious Transactions by 2023

South Korea’s Financial Intelligence Unit reported a record number of cryptocurrency transactions suspected to be involved in money laundering, market manipulation and drug dealing in 2023.Bitcoin Miner

South Korea witnessed a surge in cryptocurrency transactions, especially after the market recovery. Accordingly, the country’s authorities received nearly 49 percent more alerts about potentially suspicious transactions from cryptocurrency service providers in 2023 than in the previous year.

South Korea recorded 16,076 cryptocurrency transactions in 2023 suspected to be related to activities such as money laundering, market manipulation, or illegal drug dealing, according to a Financial Intelligence Unit (FIU) document.Bitmain Miner

Suspicious Cryptocurrency Transactions Surge in South Korea

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

It also mentioned that the number of reports related to suspected cryptocurrency-related crimes surged by about 90 percent in 2023 compared to the previous year.

However, citing the Specified Financial Information Act, the agency did not provide specific information about these alerts. It has not clarified whether these alerts also originate from cryptocurrency exchanges, similar to STRs.

To date, the IRS and the Police Department have received 100 cases of unregistered cryptocurrency lending businesses.

These cases were flagged using data on suspicious transactions collected by the FIU between December 2023 and January 2024.3 The FIU has not yet received any suspicious transaction reports.

Going forward, the FIU intends to implement a new system designed to immediately stop suspicious virtual asset transactions before local prosecutors can investigate. The main objective of the system is to conduct an initial test of its implementation by March of this year.

Enhanced scrutiny

The release of the report is in line with South Korea’s increased scrutiny of the sector, triggered by several noteworthy failures in 2023.

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

Recently, South Korean Customs revealed that some 88% of illegal foreign exchange transactions involved digital assets, some of which used cryptocurrencies to evade taxes. In response, customs authorities have set up a specialized team aimed at combating cryptocurrency-related crimes.