The Gyeonggi Provincial Tax Justice Department, located in the most densely populated province of South Korea, successfully recovered 6.2 billion won ($4.6 million) in undeclared taxes in 2023. This achievement was made possible through the implementation of a digital tracking system that specifically targeted tax evaders using crypto accounts.
According to a report from Yonhap News Agency on February 22nd, the tax department of Gyeonggi utilized resident registration data to identify “delinquents” and tracked their mobile phone numbers to locate their accounts on digital asset exchanges. This innovative digital tracking system replaced the previous method of requesting information from crypto exchanges on a case-by-case basis, a process that often took up to six months. Thanks to the province’s newly developed digital management system, this procedure was significantly reduced to just 15 days.
Using this system, the provincial tax department successfully identified the crypto accounts of 5,910 individuals who owed more than 3 million won ($2,200) each in local taxes. As a result, the department collected a total of 6.2 billion won ($4.6 million) from 2,390 offenders.
The province is now planning to enhance its collaboration with virtual asset exchanges and will review administrative measures for those platforms that refuse to cooperate. Noh Seung-ho, the head of the Provincial Tax Justice Department, expressed this intention.
In addition to the efforts made 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 outflows. The agency also has plans to introduce a “virtual asset analysis system” that will track and analyze the details of virtual asset transactions and their complex movement paths.
The South Korean government recently updated the Virtual Asset Users Protection Act in early February. This legislation imposes severe criminal penalties and fines for violations, including imprisonment for more than one year or fines ranging from three to five times the amount of illegal profits. Individuals involved in illegal crypto trading schemes that generate more than 5 billion won ($3.8 million) may face life sentences.