Investigating South Korean Banks for Illegal Money Transfer Transactions

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Investigations have begun into South Korean banks over their potential involvement in facilitating suspicious money transfers worth $6.5 billion that have been linked to cryptocurrency arbitrating firms, according to Cointelegraph .

As reported by Cointelegraph, based on a report by Asia Times, the Financial Surveillance Service (FSS) has ordered an investigation into South Korean banks after identifying a considerable amount of supervised remittance transactions at the end of June. During the investigation, it was discovered that the majority of the $6.5 billion transferred between January 2021 and June 2022 was made through cryptocurrency exchange accounts before being sent, suggesting that some Korean companies are illegally using the Kimchi bounty. (kimp). The Kimchi premium is considered to be the spread between the prices of cryptocurrencies in South Korean exchanges compared to foreign exchanges. Cryptocurrencies bought by investors in foreign markets resell them at a profit in local markets.

Cointelegraph news mentioned that regulators have raised concerns about Kimchi’s bounty trading due to its encouragement of capital flight from the country. Currently, Kimchi’s premium stands at 3.37%, but was 20% higher last April, according to market tracker CryptoQuant. Shinhan Bank and Woori Bank reported that the majority of the money handed over was first transferred out of the national cryptocurrency exchange to various Korean corporate accounts. Suspicions of money laundering have also been raised, as reported by KBS news outlet, with employees of undisclosed companies being arrested.

Additionally, data from Cointelegraph indicated that the total amount sent overseas was more than double what the FSS had expected, when it ordered the banks to investigate the matter. The FSS should now impose sanctions on Shinhan and Woori for authorizing the amount of remittances. According to reports, on-site investigations in Shinhan and Woori are expected to be completed soon.

(With information from Cointelegraph)

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