FSS orders investigation into banks over kimchi premium ties 1

The Financial Supervisory Service (FSS) has ordered regulators to look into the activities of South Korean banks regarding their involvement in the Kimchi premium. According to a local news station report, several banks acted as facilitators to help move more than $6.5 billion abroad. Further details of the report mentioned that the companies that moved the said funds have previously dealt with digital assets.

FSS discovered a $6.5 billion remittance

The investigation was said to have been deemed necessary after the FSS found a massive amount of remittances that were sent abroad in June. After the investigations, it was discovered that about $6.5 billion of the funds sent abroad were received from several countries’ crypto exchanges.

Further details also revealed that most of the companies in the area were leveraging the Kimchi premium for their gain. The Kimchi premium is described as the gap in the selling price of digital assets. Korean exchanges sell digital assets at prices different from other exchanges abroad, so some users use this gap to earn profits. The FSS has always talked about the dangers of the premium as it encourages the capital to leave the country.

Guilty companies risk sanctions

According to some websites, the Kimchi premium is presently around 3%, with the premium as high as 20% in the last few months. According to reports from top banks in the country, most of the money deposited was withdrawn from several crypto exchanges, which were then sent to accounts belonging to several top companies. These activities have confirmed that such companies knowingly exploit the premium to make gains for themselves.

There are also claims that some of the remittances were proceeds from money laundering. According to an outlet, several employees of some companies are now under arrest pending an investigation into their activities. The FSS noted that when it ordered the investigations, it did not expect the remittances to double their predicted amount.

With this update, the regulator is now expected to conduct investigations at the locations which could spell trouble and uncover more details. There are also claims that the FSS will sanction the banks with the highest remittances if they are found guilty of the crime. An executive of the body mentioned that more investigations are being carried out presently, and sanctions must follow if the parties are guilty of the offense.