(LEAD) Abnormal overseas money transfers at 2 banks valued at 4.1 tln won: watchdog

All News 16:41 July 27, 2022

(ATTN: UPDATES with more details from para 3)

SEOUL, July 27 (Yonhap) -- South Korea's financial watchdog said Wednesday its probe found abnormal foreign exchange transactions reported by two major banks, Woori Bank and Shinhan Bank, were valued at 4.1 trillion won (US$3.2 billion).

Unspecified local cryptocurrency exchanges were involved in the suspicious foreign currency transactions, and most of the money was remitted abroad, according to the Financial Supervisory Service (FSS).

The inspection found the amount of the money transfers exceeded the combined 2.5 trillion won in transactions reported by the two banks.

Lee Joon-soo, senior deputy governor of the Financial Supervisory Service, holds a press briefing in Seoul on July 27, 2022, over the result of its inspection into two major banks in connection with abnormal overseas money transfers. (Yonhap)

The watchdog said cryptocurrency exchanges transferred a sum of money to accounts in dozens of firms, which later remitted the money to overseas units through the two lenders.

Around $2.5 billion was remitted to Hong Kong, followed by $400 million with Japan, $200 million with the United States and $160 million with China, it added.

Woori Bank earlier reported to the FSS that one of its local branches handled around 900 billion won worth of FX remittances over the past year. They are suspected of be fraudulent transfers, given the much larger-than-usual transaction size.

Shinhan Bank reported a similar case, saying that it identified an overseas money transfer valued at some 1.6 trillion won at two of its branches.

The watchdog said five of Woori Bank branches handled money transfers worth 1.6 trillion won between May 2021 and June 2022. For Shinhan Bank, 11 of its branches dealt with FX transactions valued at 2.5 trillion won between February 2021 and July 2022.

The FSS has been looking into the possibility of any violations of the anti-money laundering law or the foreign exchange transaction act.

Some experts suspected the remittances might have been aimed at cashing in profits from price gaps of cryptocurrency assets between South Korean and overseas markets and laundering money.

The FSS earlier called on all commercial banks to check if they handled similar suspicious money transfers and to report to the watchdog the outcome of their internal review by the end of this month.

The watchdog warned it will take stern actions if bank officials are found to have deliberately aided or conspired with such irregular FX transactions.