KCS "29 Illegal Currency Exchange Businesses Detected, Suspended and Penalized"

#Company A, an unmanned currency exchange operator, was caught by customs authorities for falsely recording exchange ledgers as if foreign currency purchased from customers was sold to employees, when in fact it was sold to Seoul-based Company B currency exchange operators who could offer higher exchange rates, instead of selling to designated foreign exchange banks.

#Online currency exchange operator Company C failed to make additional deposits of 100 million KRW (April), 320 million KRW (May), and 510 million KRW (June) respectively, despite increased exchange performance from March to June last year, violating the requirement to make these additional deposits beyond the initial performance bond of 100 million KRW.

The Korea Customs Service announced on the 14th that it conducted a focused crackdown on currency exchange operators from October 10 to December 20 last year, uncovering illegal activities such as those by Company A and taking measures including business suspension and fines.

The electronic board at a currency exchange in Myeongdong, Seoul, displays foreign currency exchange rates. The photo is unrelated to the article. Photo by Jinhyung Kang aymsdream@

The focused crackdown targeted 41 high-risk currency exchange operators. There are a total of 1,420 registered currency exchange operators with the Korea Customs Service. High-risk operators were selected based on their location in foreigner-dense areas such as Siheung, Ansan, and Daerim, or based on risk assessments from prior information analysis.

The high-risk group included 33 face-to-face operators and 8 online and unmanned operators. This is the first time online and unmanned operators were included in the focused crackdown. Considering the recent rapid growth in exchange volume of online and unmanned operators, the Korea Customs Service included them in the crackdown targets. Their exchange volumes have increased from 5 million USD in 2021 (1% of all operators) to 93 million USD in 2022 (3%), 365 million USD in 2023 (6%), and 385 million USD in the first half of last year (21%), showing a growing share.

The violations found during the crackdown mainly involved falsifying exchange ledgers by either falsely recording transaction parties or fabricating the absence of exchange performance despite actual transactions (8 operators), and failing to report business closure despite actual closure (17 operators).

By operator type, 6 were online/unmanned currency exchange operators and 23 were face-to-face operators. Notably, 10 of the detected operators (34%) were run by foreigners of Chinese, Russian, and other nationalities.

As of the end of last year, there were a total of 1,420 registered currency exchange operators with the Korea Customs Service. Among them, 1,377 were general currency exchange operators, 25 were online/unmanned operators, and 18 were casinos. By region, Seoul had the highest number with 799 operators, followed by Incheon with 222, Gwangju with 171, Busan with 129, Daegu with 64, and Pyeongtaek with 35.

A Korea Customs Service official stated, “There have been cases where currency exchange booths have deviated from the original purpose of ‘enhancing foreign tourists’ convenience in currency exchange’ and have been exploited as channels for illegal remittances such as hawala or laundering proceeds from voice phishing crimes,” adding, “The Korea Customs Service will continue focused crackdowns on high-risk currency exchange operators to ensure compliance with currency exchange business regulations and prevent legitimate exchange booths from becoming gateways for foreign exchange crimes.”