An organization that illegally transferred and received overseas gambling funds through the 'Hwanchigi' method has been caught by customs authorities.
On August 21, the Seoul Regional Customs Office announced that it had referred 10 individuals, including a person identified as A, to the prosecution on charges of violating the Foreign Exchange Transactions Act.
'Hwanchigi' transactions between Korea and the Philippines as well. Provided by Seoul Regional Customs Office, Korea Customs Service
According to the Seoul Customs Office, these individuals are suspected of illegally transferring and receiving approximately 137 billion KRW under the pretense of overseas gambling funds and similar purposes.
The ringleader, A, has systematically conducted Hwanchigi operations since 2022 by hiring acquaintances as local agents and dollar couriers in the Philippines. Hwanchigi refers to illegal foreign exchange transactions in which unregistered operators, not authorized under the Foreign Exchange Transactions Act, act as intermediaries for cross-border fund transfers instead of banks.
During the Hwanchigi process, A and the local agents were stationed at casinos in the Philippines, recruiting users of the scheme and taking charge of facilitating the illegal transfers.
They operated the Hwanchigi business by receiving Korean won from users-either deposited into domestic accounts or collected in person in Korea-and then delivering the equivalent amount in Philippine pesos (or other local currencies) by transferring it to so-called "junket room" accounts or handing it over in cash. Junket rooms refer to exclusive, high-stakes private gambling rooms within overseas hotel casinos.
Accomplices such as B, who acted as dollar couriers, were responsible for smuggling the Hwanchigi funds out of Korea to the Philippines, averaging 200,000 USD per trip over a total of 519 trips.
They facilitated the illegal transfer by exchanging the funds received from Hwanchigi users into 100-dollar bills at currency exchange offices in Myeong-dong and Jongno, concealing the cash in checked baggage such as suitcases and golf bags, and smuggling it to the Philippines for use as Hwanchigi funds.
Separate from referring A and others to the prosecution, the Seoul Customs Office also investigated Hwanchigi users who illegally received foreign currency overseas with their assistance, imposing fines on them. In addition, the authorities plan to notify relevant agencies of the details for further investigation into the sources of the funds.
A representative from the Seoul Customs Office stated, "Recently, Hwanchigi has increasingly been exploited as a major channel for the movement of illegal funds, including smuggling, voice phishing, and gambling money. We will focus on blocking the illegal outflow of criminal proceeds to protect the assets of the public."
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