South Korean authorities have identified a record number of suspicious cryptocurrency transactions this year, with totals already exceeding the combined figures from the previous two years.
Referring to data from the Financial Intelligence Unit (FIU) shared with Representative Jin Sung-joon and statistics from the Korea Customs Service (KCS), Yonhap News reported that local virtual asset service providers (VASPs) submitted 36,684 suspicious transaction reports (STRs) from January to August 2025.
STRs are a fundamental part of South Korea’s Anti-Money Laundering (AML) strategy. According to national laws, financial institutions, casinos, and VASPs must submit STRs if they have reasonable grounds to suspect that the funds are related to criminal activities, money laundering, or terrorist financing.
The reports filed between January and August surpass the total STRs from 2023 and 2024, which were 16,076 and 19,658, respectively. This also significantly exceeds the 199 cases in 2021 and the 10,797 in 2022.
Authorities Investigate Illegal Foreign Remittances and Stablecoins
South Korean officials indicated that most of the flagged transaction flows are related to “hwanchigi,” or illegal foreign exchange remittances. In these scenarios, criminal proceeds are converted to cryptocurrency via overseas platforms, routed through local exchanges, and then cashed out in won.
From 2021 until August 2025, the KCS reported $7.1 billion in crypto-related crimes to prosecutors, with approximately $6.4 billion (about 90%) connected to hwanchigi schemes.
In May, customs officials discovered an underground broker accused of leveraging the Tether (USDT) stablecoin to illegally transfer around $42 million between South Korea and Russia. Two Russian nationals were charged with conducting over 6,000 illegal transactions between January 2023 and July 2024.
Due to incidents like these, Jin has called for agencies like the KCS and the FIU to enhance enforcement measures aimed at tracking criminal funds and preventing concealed remittances.
The official emphasized the need for government agencies to implement systematic countermeasures against emerging forms of foreign exchange crimes.
Related: South Korea crypto firms receive ‘venture company’ status next week
A Global Policy Challenge
South Korea’s statistics reflect a larger policy challenge that regulators worldwide are facing. While stablecoins and digital currencies provide quicker and cheaper payment options, they also open new avenues for illicit activities.
The European Union’s Markets in Crypto-Assets (MiCA) regulation addresses the risks associated with illegal cross-border transactions by requiring issuers to obtain licenses for transparency.
It also imposes limits on large stablecoin volumes, capping transfers to one million transactions per day or a notional value of 200 million euros per day.
In 2021, policymakers from the European Central Bank considered the idea of restricting digital euro holdings to 3,000 euros per person to curb unchecked foreign exchange activity.
In 2023, the Bank of England proposed individual limits on digital pounds ranging from 10,000 ($13,558) to 20,000 British pounds. However, UK crypto groups criticized this approach, arguing that such limits are impractical.
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