In a crackdown by the Korea Customs Service, 47 domestic currency exchange businesses were found to have violated regulations. The most common cases involved falsifying or failing to prepare exchange ledgers, and failures to file large cash transaction (CTR) reports were also identified.
The Korea Customs Service said on the 7th that it conducted an intensive crackdown starting in March on 104 of the 1,320 domestic currency exchange businesses (as of the end of June) deemed high risk, uncovering a total of 63 violations at 47 locations. Accordingly, it imposed administrative sanctions including suspension of operations at three locations, fines at 27, warnings at 42, and corrective orders at two.
The Korea Customs Service conducts two intensive crackdowns a year, in the first and second halves. The latest operation was carried out to block the abuse of street currency exchanges as channels for moving proceeds from voice phishing, illegal underground remittances, and other transnational crime funds.
Among the targets, 64 were businesses judged to have high risk, such as those located in areas densely populated by foreigners, the largest share. In addition, 18 businesses that registered before inspection authority was transferred to the Korea Customs Service and have operated for a long period, 17 located in foreign tourist areas, and five suspected of using virtual assets for illegal remittances were also included in the inspections.
By type of violation, the most frequent was falsifying or failing to submit exchange ledgers, found at 34 locations. That was followed by 13 locations violating business performance standards, such as failing to use exchange certificates, and eight exceeding foreign currency sales limits. In addition, two locations failed to notify purchases of foreign currency exceeding $10,000, one violated registration requirements, and five were caught failing to report large cash transactions (CTR) under the Act on Specified Financial Transactions. Businesses that failed to file CTRs will be reported to the Korea Financial Intelligence Unit (FIU).
By the representative's nationality, the detection rate was higher for businesses run by Chinese nationals at 47.6% (20 of 42) than for those run by Korean nationals at 40.7% (24 of 59).
The Korea Customs Service plans to further toughen sanctions on underground remittances in line with the revised Foreign Exchange Transactions Act that takes effect on Dec. 3. The revised law allows administrative dispositions, such as canceling registrations, when professional foreign exchange business operators conduct foreign exchange business beyond their authorized scope.
Cho Han-jin, head of the foreign exchange investigation division at the Korea Customs Service, said, "Recently, illegal virtual asset exchanges have been spreading across Seoul, including Myeong-dong and Gangnam, and methods of underground remittances are becoming more diverse, including the use of easy remittance services such as WeChat Pay and Alipay."