South Korea Customs Uncovers $102M Crypto Laundering Scheme

South Korean customs officials have uncovered a major international cryptocurrency laundering operation involving $101.7 million in illicit funds. The Korea Customs Service (KCS) announced the discovery of the scheme, which operated from September 2021 to June 2025. Three Chinese nationals have been referred to prosecutors for alleged violations of the Foreign Exchange Transactions Act.

The criminals used a network of overseas wallets and South Korean bank accounts to transfer funds across borders. The operation disguised the transactions as legitimate expenses, including plastic surgery fees for foreign nationals, overseas education costs, and duty-free shopping. This strategy allowed the group to avoid detection by financial regulators for nearly four years.

The case highlights a broader shift in South Korea's cryptocurrency policy. Just last week, the country lifted a nine-year ban on corporate crypto investments. The new rules allow listed companies to invest up to 5% of their equity capital in the top 20 cryptocurrencies by market cap on South Korea's five major exchanges.

Why the Scheme Was Successful Despite Strict Crypto Rules

The operation was able to exploit gaps in cross-border financial monitoring. Despite South Korea's strict anti-money laundering (AML) regulations, the group used a combination of offshore crypto exchanges and domestic trading platforms to move funds undetected. By converting foreign currency into cryptocurrency and then back into Korean won via South Korean exchanges, the launderers bypassed traditional banking controls.

Authorities noted that the launderers took advantage of the high volume of international transactions related to services like cosmetic surgery and education. These sectors naturally generate large foreign currency inflows, making it easier to mask illicit transfers.

How the Laundering Operation Was Detected

The KCS used a combination of digital tracing and financial intelligence to dismantle the network. The scheme operated through multiple bank accounts and layered transfers to obscure the origin of the funds. At one point, the group even used ATMs to withdraw cash as part of their laundering process.

To appear legitimate, the group labeled the transactions as cosmetic surgery fees, overseas education payments, and general remittances. These labels made the transfers look like normal business activity, reducing the likelihood of suspicion.

What This Means for South Korea's Crypto Regulations

This case is likely to accelerate regulatory changes in South Korea. Authorities have indicated that stricter on-chain tracking and enhanced cooperation between customs and financial regulators may be on the horizon. The government is also considering tighter rules for private wallets to prevent illicit transfers.

The timing of this case is significant. It comes at a time when South Korea is expanding its crypto market, including the legalization of tokenized securities and the approval of spot crypto ETFs. The government has emphasized a balance between innovation and financial integrity.

The KCS and other regulatory bodies are now focusing on strengthening cross-agency coordination to detect and prevent similar schemes in the future. The case also highlights the need for improved international cooperation, especially with Chinese authorities, who are helping track one of the suspects still overseas.