South Korea recovered $4,6 million in undeclared taxes thanks to a digital crypto tracking system

What’s new? The Gyeonggi Provincial Tax Justice Department, South Korea, has recovered 6,2 billion Korean won (~$4,6 million) in undeclared taxes in 2023 after implementing a digital system to track the cryptocurrency accounts of tax evaders. The regulator used the offenders’ registration data by tracking cell phone numbers to locate their cryptocurrency accounts, Yonhap reports.

Yonhap’s material

What else is known? Previously, tax authorities had to request information from crypto exchanges on a case-by-case basis. It took up to six months to communicate and exchange documents. According to Yonhap, a digital management system developed by the province has reduced this process to about 15 days.

Using the system, the provincial tax department discovered the crypto accounts of 5910 citizens, each of whom owed more than 3 million Korean won (~$2200) in taxes. The department recovered 6,2 billion Korean won (~$4,6 million) from 2390 violators.

The province plans to strengthen cooperation with virtual asset exchanges and “review administrative measures” for those platforms that refuse to cooperate. Noh Seung-ho, head of the Provincial Tax Justice Department, said the regulator will continue “to take strong collection action against unscrupulous delinquents, such as those who say they have no money to pay taxes and trade virtual assets.”

South Korean authorities will tighten regulation of crypto exchanges

The Financial Intelligence Unit proposes to implement FATF rules to block suspicious crypto transactions during pre-trial investigations

Read more

Earlier this month, the Financial Intelligence Unit (FIU) proposed stricter regulation of digital asset exchanges, specifically implementing FATF rules to block suspicious crypto transactions during pre-trial investigations.

The FIU also reported that the number of suspicious crypto transactions in South Korea increased by 49% in 2023. For instance, 16 076 transactions suspected of being involved in illegal activities were recorded last year.

In addition, South Korea toughened penalties for violations of the law on the protection of users of virtual assets. Thus, for fraud, market manipulation, and insider trading, offenders will receive from one year in prison or a fine of 3-5 times the amount of illegally obtained profits.