🧠 Food for thought

Implications, context, and why it matters.

The scale of South Korea’s crypto-forex problem needs to be clarified

• The 148.9 billion won case is listed without context. Its weight should be judged against past enforcement of illegal crypto-linked foreign exchange cases.
• Between 2021 and August 2025, 36,684 suspicious transaction reports (STRs) were filed by South Korean virtual asset service providers (VASPs), crypto businesses such as exchanges and custodial wallet providers, based on Financial Intelligence Unit (FIU) data cited by Yonhap 1.
• Most flagged flows were described by authorities as illegal foreign exchange remittances called hwanchigi, an informal value-transfer method used to move money across borders outside regulated channels 1.
• From 2021 through August 2025, $7.1 billion in crypto-linked crimes was referred to prosecutors by the Korea Customs Service (KCS), with $6.4 billion, about 90%, tied to hwanchigi schemes 1.

RegTech firms can address South Korea’s specific compliance gaps

• RegTech (regulatory technology) providers can sell to South Korean banks and cryptocurrency exchanges.
• Illicit transfers were masked as cosmetic surgery bills or tuition fees, so better automated checks are needed at banks and crypto exchanges 2.
• Tools can support compliance with South Koreas foreign exchange rules by improving bank due diligence and suspicious transaction reporting for crypto-linked accounts and exchanges 3.
• Software can monitor deposits or withdrawals for anti-money laundering (AML) patterns, such as over 10 million won per day or 20 million won per week, which can trigger a suspicious transaction report (STR) 3.
• These products can help local financial institutions reduce this high-volume type of financial crime.