South Korean Crypto Exchanges Reported that Suspicious Crypto Transactions Surged 50% in 2023

When it comes to the cryptocurrency sector in South Korea, the market has recently come under fire from regulatory agencies. The Financial Intelligence Unit (FIU) recently directed local trading platforms to report suspicious activity that could be connected to money laundering or illegal foreign exchange flow.

As per the latest FIU projections, the total number of illegal crypto transaction volume increased by 49% in 2023.

On 14th February, FIU published a summary of the program to regulate cryptocurrency transactions in 2024. This program entails that exchange platforms operating within the region share important data with the regulators.

The regulatory agency has asserted that this data will be used to plan and implement policies to regulate the cryptocurrency sector. The FIU has adopted a proactive stance towards cryptocurrency regulations in recent times.

To this end, the regulator has taken various initiatives to encourage the local crypto services providers to flag and report any illegal transactions that may be traced back to money laundering or illegal forex outflow. FIU statistics indicate that there were a total of 16,076 counts of illegal transaction notifications for 2023. The number as per FIU’s previous records has increased from 10,797 total reports in 2022.

Rise of Cryptocurrency Crimes

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As per FIU, the total amount of all types of illegal transactions for the last financial year increased by 10.2%. Another metric that the regulatory firm has published suggests that for 2023, crypto-related crimes increased by 90% on a year-to-year basis.

FIU had to refrain from sharing further details regarding the statistics on account of the Specified Financial Information Act. In the same manner, the agency was unable to disclose the particulars of the crypto exchanges that shared these details.

Additionally, the regulators have cited 100 cases of unregistered cryptocurrency loaning services. FIU has forwarded this issue to the National Tax Service and National Police Agency. These cases are to be tracked based on annual transaction data collection by FIU agents between December 2023 and January 2024.

Virtual Currency Analysis System

FIU is also working on expanding its cryptocurrency swat team in 2024. The regulators have plans to launch a new virtual currency analysis system for gathering and analyzing transaction details and tracking suspicious transactions on complex paths.

The Korean Times also reported that FIU is planning to go with a trading suspension tool. This tool will allow the regulators to halt any suspicious transactions in advance. This report was published a few days before FIU published the revised policies that cover local cryptocurrency service providers.

The FIU release has confirmed that it can freeze any suspicious transactions before it opens an investigation against a defaulting firm.

Financial Services Commission Brings New Crypto Laws

Financial Services Commission (FSC), the regulatory agency in South Korea, brought stringent laws against cryptocurrency lawbreakers. The 7th February notification of the agency claimed that criminals found in possession of more than $3.8 million proceeds from illegal crypto ventures can face a lifetime imprisonment sentence.

Meanwhile, the Financial Services Commission (FSC) Chairperson Kim Joo-Hyun issued a statement on 14th February talking about the $56.97 billion low-interest financial aid program geared towards small businesses.

As per a report published by CNBC, South Korean state-run banks are going to contribute 15 trillion won in easy-term loans for semiconductor and battery manufacturers. On the other hand, small businesses are set to contribute around 20 trillion won for SME growth and support.

Chairperson Kim noted that with the progressing trading relationship with China, FSC is working on bringing regulatory reforms and financial support for technical sector firms. He further stated that in order to address the issue of liquidity issues, banking firms are set to offer low-interest rates to businesses from select fields.

Meanwhile, another report published in The Bank posits that the South Korean government is currently working on introducing foreign investment-friendly policies on account of major firms such as Goldman Sachs, UBS, and Barclays taking an exit from the region during the past few years.

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