- South Korea’s NTS is building a 2.99B won AI system to track crypto tax evasion risks this year.
- Police will target Tether laundering as fraud groups move criminal proceeds overseas via USDT.
- Mandatory crypto transaction reporting by service providers starts in 2027, boosting tax data flows.
South Korea is expanding its response to crypto-linked financial crime as tax authorities and police move on two connected fronts. The National Tax Service is building an AI-based virtual asset analysis system, while police are increasing crackdowns on stablecoin laundering operations.
The moves come as officials point to growing misuse of digital assets in tax evasion, money laundering, irregular gifting, and offshore transfers. Authorities are also preparing for a larger flow of transaction data once virtual asset service providers begin mandatory personal transaction reporting in 2027.
Tax Agency Moves Toward AI-Based Crypto Tracking
The National Tax Service (NTS) launched its “Virtual Asset Integrated Analysis System Construction Project” at the Seoul Regional Tax Office’s Information Technology Center. According to a local media report, the project is scheduled to run until the end of the year.
The system has a budget of about 2.99 billion won. It is designed to collect, manage, and analyze information on virtual asset transactions alongside blockchain transaction data. Similarly, the platform will connect materials submitted by virtual asset service providers, including transaction statements and summary tables.
It will also link external blockchain information with tax filings, tax records, and investigation data. Per the reports, tax officials plan to use the system to track asset flows by taxpayer. It will provide transaction summaries, changes in holdings, and wallet balance information.
The system will also visualize identified wallet addresses by combining them with blockchain transaction data. Officials expect this to help investigators follow fund movement paths more clearly.
The expanded analysis could cover transactions that are hard to verify through existing tax records alone. That includes activity involving non-custodial wallets, where users control assets outside centralized platforms.
Abnormal Transaction Detection Becomes Central Tool
A key part of the system is AI-based abnormal transaction detection. The National Tax Service plans to use machine learning and statistical techniques to identify suspicious transaction patterns and individuals.
The system will support analysis of suspected tax evasion linked to virtual assets. It will also help examine possible money laundering and unreported inheritance or gift transfers.
Therefore, investigators will be able to analyze large data sets through a platform that links information from several sources. The system is also expected to reduce manual work that currently slows investigations.
However, data protection controls will be included. Access control and access log management will restrict the use of transaction information to the minimum necessary scope.
Police Step Up Response to Tether Laundries
The police are also intensifying action against so-called “Tether laundering operations.” These operations are suspected of converting criminal proceeds into Tether, or USDT, before moving funds overseas.
Park Sung-joo, head of the National Investigation Headquarters, said police will prepare specialized virtual asset investigation training with agencies such as the Financial Intelligence Unit. He said investigators already handle crypto-linked fraud, gambling, and drug cases, but will also pursue laundering of criminal proceeds.
Police cited concerns over undeclared exchange offices spreading in Seoul. Phishing groups are accused of converting proceeds from voice phishing and other crimes into Tether through these offices.
The Criminal Proceeds Tracking Team will receive virtual asset tracking training for the first time in the second half of the year. Police said they have already secured nearly 100 million won for the related budget.
The broader enforcement push also includes stronger responses to drug crimes and abnormal-motive crimes. However, the crypto measures show a clear shift toward coordinated tracking, data analysis, and investigator training as South Korea targets digital-asset crime.
Related: South Korean Academics Push Back Against 2026 Crypto Tax Plan
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