Digital System Tracks Tax Evaders’ Crypto in South Korean Province

The tax department in Gyeonggi, the most densely populated province in South Korea, has successfully collected 6.2 billion won ($4.6 million) in non-declared taxes through the use of a digital tracking system. This system focuses on monitoring cryptocurrency accounts of tax evaders. By utilizing resident registration data and tracking mobile phone numbers, the tax department was able to discover accounts on virtual asset exchanges belonging to individuals who had not reported their taxes. This approach is a significant improvement compared to the previous method, which required the tax department to individually request information from crypto exchanges, a process that often took up to six months. With the new digital system, the process has been reduced to approximately 15 days.

By implementing this digital tracking system, the provincial tax department managed to identify and track the crypto accounts of 5,910 individuals who each owed at least 3 million won ($2,200) in local taxes. In total, the department was able to collect 6.2 billion won ($4.6 million) from 2,390 offenders. Going forward, the Gyeonggi province intends to collaborate more closely with virtual asset exchanges and take “administrative measures” against platforms that refuse to cooperate. Noh Seung-ho, the head of the Provincial Tax Justice Department, has pledged to continue pursuing tax evaders who claim to have no funds to pay taxes while engaging in virtual asset trading.

In addition to the efforts by the Gyeonggi tax department, South Korea’s Financial Intelligence Unit (FIU) has actively encouraged crypto exchanges to report any suspicious transactions that may involve money laundering or illegal foreign exchange activities. The FIU plans to launch a virtual asset analysis system that will track and analyze the details of virtual asset transactions and their complex movement patterns.

To strengthen regulations in the country, the South Korean government recently updated the Virtual Asset Users Protection Act in early February. This legislation imposes severe penalties, including imprisonment of over one year or fines ranging from three to five times the amount of illegal profits for violations. Those involved in illegal crypto trading schemes and make more than 5 billion won ($3.8 million) in profits can face life sentences.

The tax department of Gyeonggi province in South Korea has made significant progress in collecting non-declared taxes from crypto accounts through the implementation of a digital tracking system. Their success highlights the importance of cooperation between tax authorities and virtual asset exchanges in combating tax evasion. The government’s efforts to regulate the crypto industry and crack down on illegal activities demonstrate their commitment to maintaining financial integrity and preventing money laundering and illicit foreign exchange transactions.