Voice phishers exploit foreign-currency account loophole

Fraudsters target gap in payment-freeze systems

New tactic: 'Build forex history to get a loan'

Experts urge swift fix to foreign-currency freeze rules

[Created using ChatGPT]
[Created using ChatGPT]

After the Financial Supervisory Service tightened gift-card sales limits to curb money laundering, voice phishing rings have begun routing stolen funds through foreign-currency accounts instead. Banks can immediately freeze a won-denominated account once voice phishing is confirmed, but foreign-currency accounts cannot be blocked as quickly through existing computer systems — a gap criminal networks are now exploiting. Experts say authorities must close this blind spot by extending rapid payment-freeze capabilities to foreign-currency accounts.

According to police, the Ulju Police Station in Ulsan launched an investigation Thursday after a woman in her 40s, identified only as A, reported that she had transferred 250 million won ($177,000) to a foreign-currency account after receiving threatening calls from a voice phishing ring impersonating prosecutors.

The gang told A she was implicated in a crime and needed to cooperate with an investigation, then pressured her to sever all outside contact. They forced her to stay alone at an Airbnb in Ulsan in what is known as "self-imprisonment," then tricked her into believing she had to liquidate her stock holdings and pool her cash as part of a procedure to prove her innocence.

A transferred 250 million won — raised partly through stock sales — to a foreign-currency account the phishing ring had designated. When a bank employee noticed the suspicious transaction and asked about the purpose of the transfer, A said she was lending business funds to a cousin.

The employee remained skeptical: A was sending a large sum to a foreign-currency account, not a won account, even though the supposed recipient was a domestic relative. Continuing to monitor the account, the employee spotted further suspicious activity within just over 10 minutes — A had taken out a loan of about 30 million won and secured an additional roughly 5.9 million won by selling shares.

Fearing further losses, the employee first froze A's own account to prevent additional funds from draining out. The foreign-currency account at a separate bank to which A had already wired the money was subject to restrictions that limited that bank's ability to impose a payment freeze.

Reviewing the transaction history again, the employee found evidence that A had purchased a used mobile phone and called her back, confirming she was in a state of self-imprisonment. After the employee persuaded her to seek help, A called police, who went to the accommodation and escorted her to the station.

Suspicious transactions involving foreign-currency accounts have surged of late, with phishing rings using them to siphon off stolen funds.

In a typical pattern, tens of millions of won flow into a foreign-currency burner account in more than 10 separate transactions within a single hour, then are converted into dollars or other currencies and withdrawn in under 10 minutes. Over the past three years, banks have recorded 165 cases of voice phishing proceeds being deposited into foreign-currency accounts — and suspected cases jumped sharply last week compared with normal levels.

The financial industry believes foreign-currency accounts have emerged as a new workaround following the tightening of measures against gift-card-based money laundering. The FSS recently worked with gift-card issuers, including hypermarkets, to slash the purchase limit at unmanned kiosks from 5 million won per transaction to 1 million won per day per transaction.

Phishing rings appear to have piled into foreign-currency accounts in response, targeting the gap in some banks' payment-freeze systems that makes it impossible to select a foreign-currency account for blocking.

Most domestic banks' payment-freeze systems are designed around won-denominated accounts, meaning that even when clear signs of money laundering or other crimes are detected — or an urgent victim report is filed — imposing an immediate freeze under the Telecommunications Fraud Victim Compensation Act remains difficult.

The FSS conducted a review of banks' foreign-currency account practices in June, but the information banks can access for such accounts and the level of their payment-freeze capabilities still vary widely from institution to institution.

Fraud tactics are also evolving to exploit consumers' unfamiliarity with foreign-currency transactions.

A new scheme targets consumers seeking loans, with fraudsters telling them they must "build a foreign-currency transaction record to improve their credit rating," then persuading them to open a foreign-currency account or transfer money into an account held in someone else's name. The pitch is that repeatedly conducting foreign-currency transactions accumulates a financial track record that raises creditworthiness.

Experts say authorities must overhaul the relevant computer systems and quickly establish practical standards for the victim compensation process.

Foreign-currency accounts pose a particular challenge: the amount of debt extinguished during compensation can fluctuate with exchange rate movements, and it remains unclear who bears the currency conversion fees — creating ongoing confusion on the ground.

Financial consumers should also be on guard: any request to wire a large sum to a foreign-currency account held in someone else's name — on the pretext of securing a loan or improving a credit rating — should be treated as a voice phishing attempt.


forest@heraldcorp.com
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