Drug smuggling pushes up illegal FX transactions to $9.6 billion

A Seoul Metropolitan Police Agency officer displays piles of cash confisticated from a drug trafficking ring during a press briefing on the crackdown at an agency building in Seoul's Mapo District, Friday. Yonhap

More than 13 trillion won ($9.6 billion) of illegal foreign currency transactions were reported over the past four years in the midst of an increase in drug trafficking and other smuggling activities, Korea Customs Service (KCS) data showed, Sunday.

Released by Rep. Hwang Hee of the main opposition Democratic Party of Korea (DPK), the data showed that 13.13 trillion won was involved in the crimes aimed at drawing money out of the country in violation of Korea's foreign exchange regulations from 2019 to August this year.

A total of 96.4 percent of the cases were linked to remittance of foreign currencies through unregistered money exchangers. These cases accounted for 12.66 trillion of all transactions during the cited period.

A further 1.8 percent was related to money laundering, involving 237.6 billion won.

The remaining 1.8 percent was due to the illegal outflow of cash from the country worth 232.3 billion won.

Illegal foreign currency transactions diminished in the early stage of the pandemic but rapidly increased in ensuing years.

The amount in 2019 was 3.44 trillion won which fell to 718.9 billion won in 2020. The amount rose to 1.34 trillion won in 2021 and to 6.33 trillion won in 2022.

The KCS analyzed that the illegal transactions are associated with increased drug trafficking in recent years.

For instance, the amount of seized drugs weighed in at 329 kilograms in the first half of 2023, the highest for any first six months of a year since the KCS compiled relevant data.

The customs agency also analyzed a higher intance of Koreans gambling at casinos outside the country, leading to illegal transactions. Korean nationals are prohibited under the country's Gaming Act from gambling and may face punishment upon return to the country if they engage in gambling activities while overseas.