An illegal "hwanchigi" (underground remittance) organization that facilitated unauthorized remittances and receipts between South Korea and Vietnam using virtual assets has been apprehended by customs authorities.
On October 1, the Daegu Regional Customs Office, Korea Customs Service, announced that it had arrested three naturalized Vietnamese women and two Vietnamese men on charges of violating the Foreign Exchange Transactions Act (conducting unregistered foreign exchange business) and referred them to the prosecution.
According to the Daegu Regional Customs Office, these individuals are suspected of using stablecoins such as Tether to facilitate remittances and receipts between South Korea and Vietnam on behalf of clients in exchange for commissions.
Stablecoins are virtual assets pegged to the value of the US dollar, making them less volatile. There has been a growing trend of criminal organizations using these assets for money laundering purposes.
Investigations revealed that from February 2022 to February 2025, the apprehended group conducted a total of 78,489 illegal remittance and receipt transactions, with the total transaction amount reaching 920 billion won.
According to the investigation, a Vietnamese member of the organization, identified as Mr. A (in his 30s), entered South Korea in July 2014 on an employment visa. While working in the country, he met Ms. B (in her 40s) and others, with whom he formed the hwanchigi organization.
Subsequently, Mr. A and his accomplices would transfer virtual assets from Vietnam to domestic exchanges, convert them into Korean won, and then transfer the funds to recipients designated by their clients using hwanchigi accounts. Alternatively, they would receive funds in Korea from clients, convert them into virtual assets at domestic exchanges, and remit them to Vietnam.
During this process, Mr. A and others used the Vietnamese social network service "Zalo" to share information related to hwanchigi remittance payments. In particular, Ms. B acted as the domestic hwanchigi account holder, using borrowed-name bank accounts and mobile phones to evade law enforcement tracking.
Through these methods, the amount of funds received on behalf of clients in South Korea was confirmed to be 843 billion won, while the amount remitted to Vietnam was 77 billion won.
A significant number of users who received funds from Vietnam through Mr. A and his associates were identified as cosmetics and medical supplies export and distribution companies. The Daegu Regional Customs Office plans to conduct additional investigations into users who remitted funds to Vietnam for possible borrowed-name transactions.
An official from the Daegu Regional Customs Office stated, "Hwanchigi using virtual assets goes beyond a simple violation of the Foreign Exchange Transactions Act and can be exploited as a conduit for illegal funds, including drug trafficking, gambling money, and voice phishing. The customs office will continue to strengthen and intensify its crackdown on illegal hwanchigi operations."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
