- Hwanchigi remittances remain the largest driver of suspicious cases.
- Stablecoins, especially Tether, are used in cross-border laundering schemes.
- Lawmakers push for tighter monitoring and global cooperation.
South Korea has reported a dramatic rise in suspicious cryptocurrency transactions in 2025, signalling deepening concerns over money laundering and cross-border crime.
According to data from the Financial Intelligence Unit (FIU), domestic exchanges filed 36,684 suspicious transaction reports (STRs) between January and August. This already surpasses the combined totals of the previous two years.
Authorities say much of the increase stems from illegal foreign remittance activities, known locally as “hwanchigi”, where digital assets are used to bypass capital controls and funnel money abroad.
The surge highlights how crypto crime has rapidly evolved into a systemic issue for regulators.
Suspicious transactions hit historic highs
The growth in flagged transactions has accelerated in recent years. In 2021, only 199 cases were reported. By 2022, this surged to nearly 18,000, followed by 16,076 in 2023.
The 2024 total doubled that figure, but the 2025 data for August has already set a new record.
The Korea Customs Service (KCS) referred ₩9.56 trillion ($7.1 billion) in crypto-linked crimes to prosecutors between 2021 and August 2025.
More than 90% of these cases were tied to hwanchigi-related laundering activities, where crypto is used as an intermediary to disguise and reroute funds.
Officials note that exchanges are filing STRs at unprecedented levels, showing both increased surveillance and higher levels of suspicious activity.
Stablecoins linked to global transfers
Regulators have increasingly flagged stablecoins as a key tool in illicit cross-border transactions. Stablecoins are designed to mirror fiat currencies and are often used for faster settlement. However, their role in foreign exchange crimes has become more visible.
In May 2025, customs officials exposed a case involving ₩57.1 billion ($42 million) moved between South Korea and Russia using Tether (USDT).
The investigation found two Russian nationals had completed more than 6,000 illegal transfers between 2023 and 2024. Such cases show how stablecoins can be exploited to sidestep financial restrictions, including sanctions and capital controls.
Experts highlighted this risk, pointing to the growing use of stablecoins in the real economy and their vulnerability to criminal misuse.
The South Korean parliament has urged agencies to scale up monitoring to prevent disguised remittances and to trace criminal funds more effectively.
Lawmakers demand stronger measures
South Korean lawmakers have pressed for tougher enforcement mechanisms, particularly against new types of foreign exchange crimes linked to crypto.
Calls have been made for the FIU and KCS to expand coordination, enhance transaction monitoring, and tighten compliance requirements for exchanges.
Authorities are also exploring ways to strengthen cooperation with international regulators. With hwanchigi cases often involving foreign intermediaries and platforms, officials stress the need for global partnerships to limit cross-border laundering.
Discussions focus on enhancing information sharing and creating stricter frameworks for reporting suspicious stablecoin transactions.
A global regulatory challenge
The scale of South Korea’s STR filings mirrors similar concerns elsewhere. The European Union has introduced its Markets in Crypto-Assets (MiCA) framework, which sets limits on stablecoin transaction volumes and mandates compliance checks to prevent financial crime.
Meanwhile, central banks in the UK and Europe have considered introducing transaction caps on digital currencies to reduce illicit flows.
South Korea’s data underscores how regulators worldwide are grappling with the same issue: how to balance innovation in digital payments with financial integrity.
With crypto adoption rising, the challenge for policymakers remains preventing misuse without stifling legitimate use of the technology.
