Group caught for largest-ever illegal foreign exchange trading

A ring of companies and individuals were caught for illegal trading of some 1.4 trillion won in foreign exchange over the past five years, the Korea Customs Service said Tuesday.

About 130 clothing and trading firms were involved in the largest ever case of illegal foreign exchange trading to be exposed by the KCS.

The Seoul Main Customs Office of the KCS said eight people including 45-year-old ringleader surnamed Lee have been booked without detention on charges of violating the foreign exchange trading law. Two Japanese people who transported the cash in the illegal operation have been put on the wanted list.

The customs office plans to expand the investigation into the companies involved to look into alleged rigging of sales figures, money laundering and tax evasion in transferring wealth overseas.

Lee, who used to run a trading firm in Dongdaemun, devised a new type of illegal foreign exchange trading scheme in 2007 and helped companies trading with Japan smuggle their products out of Korea. He hired Japanese people to smuggle the payments in cash from Japan to Korea, and changed the money into Korean won through a local money changer, allowing the companies to underreport revenue to amass slush funds and pay less tax. Lee allegedly earned about 3.9 billion won in commissions over the past five years.

To cover up the illegal currency exchange, the money changer who worked with Lee used copies of foreigners’ passports to make it look like the money was exchanged for other people.

They split the money into sums of under $5,000 to avoid reporting to authorities.

The KCS had Lee followed after he received two suitcases from a man at the airport, raided Lee’s office and found evidence to prove the crime. Cash worth 320 million yen (4.7 billion won) in 1-million-yen bills were found in the suitcases.

By Kim So-hyun (sophie@heraldcorp.com)