- Remittances related to hwanchigi remain the primary driver of suspicious cases.
- Stablecoins, particularly Tether, are being used in cross-border laundering schemes.
- Lawmakers are pushing for tighter oversight and greater international cooperation.
The Financial Intelligence Unit has reported a sharp rise in suspicious cryptocurrency transactions in South Korea in 2025, highlighting growing concerns about money laundering and cross-border 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 surpasses the combined totals of the previous two years.
Authorities say much of the increase stems from illegal overseas fund transfers—locally called “hwanchigi”—in which digital assets are used to bypass capital controls and move money abroad.
This surge underscores how crypto-related crime has rapidly evolved into a systemic regulatory challenge.
Suspicious transactions reach record levels
Reported suspicious activity has accelerated in recent years. In 2021, only 199 cases were reported. That jumped to nearly 18,000 in 2022, followed by 16,076 in 2023.
The total for 2024 doubled that number, and the 2025 data through August already set a new record.
The Korea Customs Service (KCS) referred 9.56 trillion won (approximately $7.1 billion) in crypto-related crime cases to prosecutors between 2021 and August 2025.
More than 90% of those cases were linked to hwanchigi-style laundering, where crypto serves as an intermediary to disguise and reroute funds.
Officials note that exchanges are filing STRs at unprecedented rates, reflecting both increased monitoring and rising volumes of suspicious activity.
Stablecoins tied to global transfers
Regulators have increasingly identified stablecoins as a key tool in illicit cross-border transfers. Stablecoins are designed to mirror fiat currencies and enable faster settlement, but their role in currency-related crimes has become more apparent.
In May 2025, customs authorities disclosed a case involving 57.1 billion won (about $42 million) transferred between South Korea and Russia using Tether (USDT).
Investigators found that two Russian nationals carried out more than 6,000 illegal transfers between 2023 and 2024. Cases like this demonstrate how stablecoins can be exploited to evade financial restrictions, including sanctions and capital controls.
Experts warn of this growing risk, pointing to the increasing use of stablecoins in real-world payments and their vulnerability to criminal misuse.
The National Assembly has urged authorities to step up monitoring to prevent disguised remittances and to track criminal proceeds more effectively.
Lawmakers demand tougher measures
South Korean legislators have pressed for stronger enforcement mechanisms, particularly to address emerging crypto-enabled transfer crimes.
Calls have been made for the FIU and KCS to broaden coordination, improve transaction tracing, and tighten compliance requirements for exchanges.
Authorities are also exploring ways to strengthen cooperation with international regulators. Because hwanchigi cases often involve intermediaries and foreign platforms, officials stress the need for global partnerships to curb cross-border laundering.
Discussions focus on improving information sharing and establishing stricter frameworks for reporting suspicious stablecoin transactions.
A global regulatory challenge
The scale of STR filings in South Korea mirrors concerns elsewhere. The European Union has implemented its Markets in Crypto-Assets (MiCA) framework, which sets limits on certain stablecoin transaction volumes and imposes compliance controls to prevent financial crime.
Meanwhile, the Bank of England and other European central banks have considered introducing transaction limits on digital currencies to curb illicit flows.
South Korea’s data underscore that regulators worldwide face a common problem: balancing innovation in digital payments with financial integrity.
As cryptocurrency adoption grows, policymakers must find ways to prevent abuse without stifling legitimate uses of the technology.