South Korea Flags Record Number of Suspicious Crypto Transactions
South Korean authorities have identified a record number of suspicious crypto transactions this year, with totals reportedly already exceeding the combined figures from the past two years.
Details from Financial Intelligence Unit Data
According to data from the Financial Intelligence Unit (FIU) shared with Representative Jin Sung-joon and statistics from the Korea Customs Service (KCS), local virtual asset service providers (VASPs) filed 36,684 suspicious transaction reports (STRs) between January and August 2025.
STRs are a key component of South Korea’s Anti-Money Laundering (AML) efforts. Under national regulations, financial institutions, casinos, and VASPs are required to submit STRs whenever there is reasonable suspicion that funds may be linked to criminal activities, money laundering, or terrorist financing.
The reported STRs for January to August have already surpassed the total for the combined years of 2023 and 2024, which were 16,076 and 19,658 respectively. This figure also greatly exceeds 2021’s total of 199 cases and 2022’s 10,797 reports.
Nature of Reported Transactions
Officials in South Korea indicated that a significant portion of the flagged transaction flows involve “hwanchigi,” or illegal foreign exchange remittances. In these operations, criminal proceeds are converted into cryptocurrencies using offshore platforms. Subsequently, these cryptocurrencies are directed to domestic exchanges and cashed out in won.
Between 2021 and August 2025, the KCS referred $7.1 billion in crypto-related crimes to prosecutors, with about $6.4 billion (approximately 90%) linked to hwanchigi schemes.
In May, customs officials uncovered an underground broker accused of utilizing the Tether (USDT) stablecoin to illegally transfer approximately $42 million between South Korea and Russia. Two Russian nationals were charged with executing over 6,000 illegal transactions from January 2023 to July 2024.
Calls for Enhanced Enforcement Measures
Due to situations like these, Jin has called on agencies such as the KCS and the FIU to bolster effective enforcement strategies to monitor criminal funds and obstruct illicit remittances. He stated that government bodies need to implement systematic countermeasures against emerging foreign exchange crimes.
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Global Concerns and Regulatory Responses
South Korea’s statistics highlight a larger regulatory challenge faced by officials worldwide. While stablecoins and digital currencies provide faster and more affordable payment options, they simultaneously open up new avenues for illicit flows.
The European Union’s Markets in Crypto-Assets (MiCA) regulation tackles risks associated with illicit cross-border transactions by mandating that issuers be licensed to promote transparency. Additionally, it imposes limits on large stablecoin volumes, capping transfers at one million transactions per day or a nominal value of 200 million euros per day.
In 2021, policymakers from the European Central Bank suggested restricting digital euro holdings to 3,000 euros per individual to mitigate unchecked foreign exchange activities. Furthermore, in 2023, the Bank of England proposed caps on digital pounds ranging from 10,000 ($13,558) to 20,000 British pounds. However, UK cryptocurrency groups criticized this approach, arguing that such limits are impractical.
