A newly unearthed report from South Korea’s financial watchdogs has revealed the rationale behind the country’s 2018 crypto crackdown that played a featured role in ‘Crypto Winter’.
Digital Today dug up the “2017 Anti-Money Laundering Annual Report” which showed the Financial Intelligence Unit had identified more than half a million crypto transactions in South Korea in 2017 related to illegal activities.
The 519,908 crypto transactions were flagged by authorities as “suspicious” and the upswing in money laundering fuelled the national government’s decision to carry out a partial crypto crackdown in 2018.
The report took several years to be made public, despite being issued in November 2018.
Crypto exchange director allegedly involved in money laundering
According to the 2017 annual report, one of the most prominent money laundering cases involved an undisclosed crypto exchange.
The Financial Services Commission detailed that the director, nicknamed “Mr. A” in the report, transferred money from his account to other exchange accounts after having received funds from traders within the exchange's corporate accounts.
Later, Mr. A transferred the money to his relatives’ accounts, repeating the same type of transactions, reaching a total transferred amount of tens of “trillions” of Korean Won. They reported that Mr. A ultimately managed to evade taxes in the country.
Increased crypto money laundering led to the crackdown
That case and others led to South Korean financial watchdogs partially cracking down on virtual assets in 2018. Based on the 2019 report, the Financial Services Commission concluded the following:
“With the rise and diversification of the financial market base due to the emergence of Kagasan Mountain and Fintech, the money laundering crime using cryptos has increased not only in quantity, but also in terms of quality, and is becoming increasingly complicated.”
Cointelegraph reported on March 5 that South Korea’s National Assembly passed a revised bill on the reporting and use of individual financial transaction information, focusing on the introduction of a permit system for crypto exchanges.
With the measure, virtual asset operators like exchanges should report their movements to the Financial Intelligence Unit under the Financial Services Commission, aiming to strengthen the anti-money laundering systems.