Employees of Paradise, which operates foreigners-only casinos in Korea, were brought to trial on allegations they failed to verify whether foreign currency exchanged by customers came from funds lawfully reported, but were acquitted at the first trial. The court found it difficult to impose on exchange staff a duty to verify how customers obtained their funds or how the money was brought into the country.
According to legal sources on the 17th, the Criminal Division 19 of the Seoul Central District Court (Presiding Judge Im Hye-won, senior judge) on the 16th acquitted the Paradise corporation, as well as employees A and B in charge of casino currency exchange operations, who were indicted on charges of violating the Foreign Exchange Transactions Act.
A and B handled exchange operations in the accounting department of Paradise Casino. Prosecutors said they failed to fulfill their duty to check whether the funds involved in customer foreign exchange transactions were subject to reporting or approval under the Foreign Exchange Transactions Act, and brought them to trial.
The exchange amount at issue totals 57 billion won. In June 2022, A purchased 800,000 Hong Kong dollars (about $101,700) from a Japanese customer at a currency exchange booth inside the casino. Prosecutors determined that A, in purchasing foreign currency totaling about 39.3 billion won over 607 transactions through Dec. 31, 2023, failed to check whether reporting was required.
B was also brought to trial on charges of failing to check whether reporting was required, among other things, while purchasing foreign currency totaling about 17.7 billion won over 209 transactions from August 2019 to March 2020. Prosecutors indicted their employer, the Paradise corporation, as well.
The court found that prosecutors interpreted the scope of obligations under the Foreign Exchange Transactions Act too broadly. While exchange staff have basic identity verification duties such as checking a customer's passport, it is difficult to conclude they are responsible for scrutinizing and confirming whether the funds are the customer's own or a proxy transaction.
The court also held that the duty to verify should not be expansively interpreted to cover the circumstances of fund acquisition or the process of bringing the money into the country prior to the exchange. The court said, "Before directly engaging in a transaction with a customer, exchange staff cannot be deemed to have a reporting duty concerning how the customer obtained or brought in the currency."
It added, "Based on the evidence submitted by the prosecutor, it is insufficient to find that the defendants violated their job-related verification duties," and rendered a not-guilty verdict.
Paradise said, "During the Korea Customs Service's regular 2024 inspection, there was a difference in legal interpretation over the scope of an exchange operator's verification duty, which led to this lawsuit," adding, "With this ruling, we have confirmed that the exchange operation process has been conducted appropriately within the legal framework."