Abnormal Forex Deals Involve Cryptocurrency Exchanges
The Financial Supervisory Service (FSS) announced on July 27 that it is investigating abnormal foreign exchange transactions in the domestic banking sector and the scale of the transactions amounts to 7 trillion won or so, including approximately 4 trillion won at Shinhan and Woori Banks.
“Most of the cases are from domestic cryptocurrency exchanges to Hong Kong, Japan and China and we are regarding these as cryptocurrency-based money laundering and illegal FX transactions,” it said, pointing out that the banks are failing in internal control.
The investigation started early this month, targeting companies that remitted at least US$50 million after foundation in 2021, frequent deposit and withdrawal at cryptocurrency-linked accounts, and frequent remittance from certain bank branches.
“The corresponding foreign exchange transactions totaled US$5.37 billion in the period of January 2021 to June this year and 44 trade corporations are involved along with most banks in the sector,” the FSS explained, continuing, “It cannot be said for sure that every remittance is illegal, and we are going to closely analyze the banks’ data and initiate additional on-site investigations whenever necessary.”
In the previous on-site investigation at Shinhan, the FSS uncovered US$2.06 billion of abnormal remittances, which occurred on 1,238 different occasions at 11 branches over about 18 months. From May 2021 to June 2022 at Woori, US$1.31 billion was abnormally remitted in 931 different cases.
Most of the remittances at the two banks started from domestic cryptocurrency exchanges. According to industry sources, the highest likelihood includes arbitrage cryptocurrency trading and money laundering. US$2.5 billion out of US$3.37 billion was sent to Hong Kong while US$400 million, US$200 million and US$160 million went to Japan, the United States and China, respectively. The money was sent not to foreign cryptocurrency exchanges but to general corporations.