In a significant breakthrough, Seoul investigators have dismantled a clandestine money-transfer network that moved approximately 150 billion won—equating to around $102 million—into and out of South Korea, utilizing a combination of mobile payment applications and cryptocurrencies.
Reports indicate that three individuals have been formally charged under the nation’s foreign exchange laws following a thorough investigation that traced the operation’s activities over several years.
Mechanics of the Operation
According to the Korea Customs Service, the perpetrators collected funds from customers through platforms such as WeChat Pay and Alipay, subsequently channeling those resources to purchase virtual currencies overseas.
These cryptocurrencies were then transferred to digital wallets based in Korea, where they would be converted into Korean won via numerous intermediary bank accounts. This methodical approach cleverly obscured the transaction trail.
Funds would arrive from abroad in cash or through mobile transactions, followed by the acquisition of cryptocurrencies across various countries, ensuring that no single regulatory body could track the entire process.
Ultimately, the money was transferred into local accounts under a multitude of aliases, all taking place over a substantial period, from September 2021 until June of the previous year, as investigators have reported.
Covering Up the Illegitimate Transactions
Investigators revealed that the operation camouflaged the origins of their funds by labeling transfers as mundane expenses, such as payments for cosmetic surgeries, fees linked to overseas education, and charges related to commerce. This tactic lent a veneer of legitimacy to the transactions, allowing the group to evade cursory inspections.
By layering their bank transfers with small, ostensibly legitimate payments, the suspects made it increasingly difficult for authorities to detect any suspicious activities until customs officials identified pervasive patterns across different accounts and platforms.
Realizing the full scope of activity, it became apparent that these were not disconnected transactions; rather, they formed a coordinated series of financial maneuvers designed to launder significant amounts of money.
Government Action and Recovery Efforts
As a result of the operation, authorities arrested and recommended prosecution for three Chinese nationals accused of managing a substantial portion of the network’s activities. Records indicate that nearly 150 billion won was traversed during the specified timeframe.
In light of this incident, regulators in South Korea have been tightening their grip on both mobile wallets and cryptocurrency exchanges recently. Courts have endorsed the seizure of crypto assets in ongoing criminal investigations, enabling the customs office to maintain vigilance when irregular patterns emerged.
This incident not only highlights the precarious ability of cross-border payment systems and cryptocurrency markets to overlap but also underscores the need for stricter regulatory measures in the industry.
Featured image from Dao Insights, chart from TradingView
