Financial Supervisory Service Issues Warning on Email Hacking 'Trade Fraud'

Over 5 Years, 2,582 Cases and 137.9 Billion KRW in Damages Occurred

[Asia Economy Reporter Jin-ho Kim] The Financial Supervisory Service (FSS) has warned that financial damages related to email hacking trade fraud targeting domestic trading companies have been steadily occurring.

According to the FSS on the 1st, over the past five years, there have been 2,582 cases of email hacking trade fraud, amounting to 137.9 billion KRW in damages.

The main types of fraud include embezzlement of trade payments and the use of third-party domestic companies to receive fraudulent funds.

Trade payment embezzlement involves hacking emails exchanged between domestic importers and their overseas trading partners (exporters), then impersonating the trading partner to instruct the transfer of trade payments to fraudulent accounts. This method is characterized by continuous contact via email over a long period, inducing the transfer of trade payments to accounts designated by the fraudsters.

The method of using third-party domestic companies to receive fraudulent funds exploits intermediary trade as a pretext, promising small profit shares and abusing the transaction accounts of third-party domestic companies as channels for receiving fraudulent funds. The third-party domestic companies providing these accounts unknowingly act as fake trade intermediaries and may become involved in international trade fraud crimes, so caution is necessary.

According to the FSS, the scale of foreign exchange fraud transactions involving trading companies over the past five years reached a total of 2,582 cases and 137.9 billion KRW. The fraudulent amounts were sent to 63 countries, with the top five countries accounting for 54.9% of cases and 64.2% of the amount. In particular, transfers to major global foreign exchange market countries such as the United Kingdom, the United States, and Hong Kong, where foreign exchange remittance transactions are easy, were at a considerable level.

Accordingly, the FSS plans to establish monitoring standards for transaction types with a high possibility of foreign exchange trade fraud. Suspicious transactions identified through monitoring will be notified to customers about the possibility of fraud, and after reconfirming their intention to proceed, the transactions will be handled following established procedures.

Furthermore, the FSS will strengthen the establishment of fraud prevention procedures specialized for trading companies, such as registering information about trading partners, and enhance publicity to prevent fraud damages.

An FSS official stated, "Due to the nature of cross-border transactions, it is difficult to recover damages after overseas remittances in foreign exchange fraud transactions," and advised, "If fraud is suspected, customers should consult with their banks before proceeding with subsequent transactions."