- Illicit cross-border money transfers remain the primary driver behind suspicious cases.
- Stablecoins, especially Tether, are being used in cross-border money laundering schemes.
- Lawmakers are calling for tighter monitoring and enhanced international cooperation.
South Korea has reported a sharp rise in suspicious cryptocurrency transactions in 2025, highlighting growing concerns about money laundering and transnational crime.
According to data from the Financial Intelligence Unit (FIU), domestic exchanges filed 36,684 suspicious transaction reports (STRs) between January and August. That figure already exceeds the totals reported in the two previous years combined.
Authorities say a significant portion of the increase stems from illegal foreign remittances known locally as “hwanchigi,” where digital assets are used to circumvent capital controls and move funds offshore.
The surge underscores how crypto-related crime has rapidly become a systemic challenge for regulators.
Suspicious transactions reached record levels
The rise in flagged transactions has accelerated in recent years. In 2021 there were only 199 reported cases. That number jumped to nearly 18,000 in 2022, followed by 16,076 in 2023.
The total for 2024 doubled earlier figures, but the 2025 data through August has already set a new record.
Korea Customs Service (KCS) referred crypto-related crimes totaling €9.56 trillion (US$7.1 billion) to prosecutors between 2021 and August 2025.
More than 90% of those cases were tied to hwanchigi-style laundering activities, where cryptocurrencies are used as intermediaries to conceal and reroute funds.
Officials note that exchanges are filing STRs at unprecedented levels, reflecting both increased surveillance and higher volumes of suspicious activity.
Stablecoins linked to cross-border transfers
Regulators have increasingly identified stablecoins as a key tool in illicit cross-border transactions. Stablecoins are designed to track fiat currencies and often provide faster settlement, but their role in currency-related crime has become more apparent.
In May 2025, customs officials uncovered a case involving €57.1 billion (US$42 million) moved between South Korea and Russia using Tether (USDT).
The investigation found that two Russian nationals carried out more than 6,000 illegal transfers between 2023 and 2024. Cases like this illustrate how stablecoins can be exploited to bypass financial restrictions, including sanctions and capital controls.
Experts have warned about this risk, noting the growing use of stablecoins in real-world transactions and their vulnerability to criminal abuse.
The South Korean parliament has urged authorities to scale up monitoring to prevent covert money transfers and to trace illicit funds more effectively.
Lawmakers demand stronger measures
South Korean legislators are pressing for tougher enforcement against new forms of currency crime linked to crypto activity.
They have called for the FIU and KCS to deepen coordination, enhance transaction monitoring, and tighten compliance requirements for exchanges.
Authorities are also exploring ways to strengthen cooperation with international regulators. Hwanchigi cases often involve foreign intermediaries and platforms, highlighting the need for global partnerships to curb cross-border laundering.
Debates have focused on improving information sharing and establishing stricter reporting frameworks for suspicious stablecoin transactions.
A global regulatory challenge
The scale of South Korea’s STR filings mirrors concerns elsewhere. The European Union has implemented the Markets in Crypto-Assets (MiCA) framework, which places limits on stablecoin transaction volumes and requires compliance controls to deter illicit finance.
Meanwhile, central banks in the United Kingdom and Europe have considered transaction limits for digital currencies to curb illegal flows.
South Korea’s data highlights a common struggle for regulators worldwide: how to balance innovation in digital payments with the need to protect financial integrity.
As crypto adoption grows, policymakers face the ongoing challenge of preventing abuse without stifling legitimate use of the technology.