- Hwanchigi money transfers remain the largest driver of suspicious cases.
- Stablecoins, especially Tether, are being used in cross-border laundering schemes.
- Lawmakers are pushing for tighter monitoring and international cooperation.
South Korea has reported a dramatic rise in suspicious cryptocurrency transactions 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 exceeds the combined totals of the previous two years.
Authorities say much of the increase stems from illegal foreign remittance activities known locally as “hwanchigi,” where digital assets are used to circumvent capital controls and move funds overseas.
The surge underscores how crypto-related crime has rapidly evolved into a systemic challenge for regulators.
Suspicious transactions reached historic highs
Flagged transactions have grown sharply in recent years. In 2021, only 199 cases were reported. That number jumped to nearly 18,000 in 2022, followed by 16,076 in 2023.
The total for 2024 doubled earlier figures, but 2025’s data through August has already set a new record.
Korea Customs Service (KCS) referred 9.56 trillion ₩ (about $7.1 billion) in crypto-related crimes to prosecutors between 2021 and August 2025.
More than 90% of those cases were tied to hwanchigi-style laundering, where crypto acts as an intermediary to conceal and redirect funds.
Officials note that exchanges are filing STRs at unprecedented levels, reflecting both intensified monitoring and higher volumes of suspicious activity.
Stablecoins linked to global transfers
Regulators have increasingly flagged stablecoins as a key tool in illicit cross-border transactions. Stablecoins are designed to mirror fiat currencies and often enable faster settlement, but their role in financial crime has become more apparent.
In May 2025, customs investigators disclosed a case involving €57.1 billion won ($42 million) moved between South Korea and Russia using Tether (USDT).
Investigators found two Russian nationals carried out more than 6,000 illicit transfers between 2023 and 2024. Cases like this show how stablecoins can be exploited to bypass financial restrictions, including sanctions and capital controls.
Experts highlighted the risk, pointing to the growing use of stablecoins in the real economy and their vulnerability to criminal misuse.
The National Assembly has urged agencies to scale up monitoring to prevent hidden money transfers and to track illicit funds more effectively.
Lawmakers demand tougher measures
South Korean lawmakers are pushing for stricter enforcement mechanisms, particularly targeting emerging forms of financial crime tied to crypto.
They have called on the FIU and KCS to expand coordination, strengthen transaction monitoring, and tighten compliance requirements for exchanges.
Authorities are also exploring ways to deepen cooperation with international regulators. Because hwanchigi cases often involve foreign intermediaries and platforms, officials stress the need for global partnerships to curb cross-border laundering.
Discussions focus on improving information sharing and establishing tougher frameworks for reporting suspicious stablecoin transactions.
A global regulatory challenge
The scale of South Korea’s STR filings mirrors concerns elsewhere. The EU has introduced its Markets in Crypto-Assets (MiCA) framework, which places limits on stablecoin transaction volumes and requires compliance controls to prevent financial crime.
Meanwhile, central banks in the UK and Europe have considered transaction caps on digital currencies to reduce illicit flows.
South Korea’s data highlight a common dilemma for regulators worldwide: balancing innovation in digital payments with financial integrity.
As crypto adoption continues to rise, policymakers face the ongoing challenge of preventing misuse without stifling legitimate use of the technology.