Korean prosecution arrests culprits behind $700 mn illegal overseas remittances

[Graphics by Song Ji-yoon]

South Korean prosecution have arrested those behind illegal overseas money transfer worth about $700 million mostly earned from arbitrage crypto trading using so-called kimchi premium on cryptocurrencies sold in the Korean market.

Daegu District Public Prosecutor's Office said Thursday its anti-corruption investigation team arrested eight people for alleged violation of the country¡¯s foreign currency transaction law and charged one without detention. The Korean authority is also tracking down eight suspected accomplices, who are known to be in Japan and China.

The charged are accused of illegally sending 934.8 billion won ($662 million) of foreign currencies abroad. The money includes funds used in arbitrage crypto trading that sells cryptocurrencies in the Korean market at a premium after buying them in overseas markets. It is said the accused profited about 27 billion won a year.

The Korean crypto market has been a target for arbitrage traders in seeking profit through the so-called kimchi premium, referring to higher cryptocurrency prices in Korean exchanges compared to overseas markets. The accused sold cryptocurrencies in bulk when the price gap widened sharply and remitted the profits to overseas through a paper company with forged invoice documents, disguising the overseas remittance was to pay for gold and computer chips imports. The accomplices in Japan and China acted as a point to send cryptocurrencies to their partners in Korea and receive wired money. Illegally transferred money from Korea to Japan amount to 495.7 billion won and to China 439.1 billion won.

The illegal transfer also involved a former bank staff, who took part by intentionally omitting related transactions from the bank¡¯s report on suspicious overseas remittance activities as well as guided the culprits on avoiding regulations. The person received cash and gift cards in return. The bank branch where the person worked earned operating profit of 2.1 billion won from commissions on foreign exchange transactions used in the criminal activities.

The prosecution is also looking into the bank branch on its internal monitoring system.

Separately, the Seoul Central District Prosecutors' Office, Financial Supervisory Service, and Korea Customs Service launched a joint probe as dubious overseas remittance has topped 10 trillion won.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]