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21 suspects referred to prosecutors for allegedly laundering $174 million through fake gift cards

Published: 13 Jun. 2025, 16:37

The interior of a company that laundered criminal proceeds through fake gift card businesses. [GURO POLICE PRECINCT]

Police referred 21 suspects to prosecutors for allegedly laundering criminal proceeds worth over 238 billion won ($174 million) through fake gift card businesses, according to officials on Friday.

Among them, 11 are under detention while 10 were referred without detention.

The ring, led by a man in his 40s, the head of a major gift card company, allegedly disguised around 238.8 billion won in illicit funds as legitimate gift card transactions between January 2023 and March 2024.

The funds originated from investment scams and illegal online gambling operations, according to the Guro Police Precinct.

Once criminal groups earned the illicit money, they passed it to a laundering syndicate. The laundering group then transferred the funds to shell companies posing as legitimate gift card vendors. Ultimately, the money reached the ring leader's large-scale gift card business.

The business owner allegedly converted the funds into gift card transactions to obscure their origin and took a cut of up to 0.3 percent per transaction. He reportedly laundered up to 300 million won at a time and physically delivered cash to the crime syndicate in black plastic bags.

The 11 shell companies linked to the suspect's business received about 1 percent in commission, according to investigators.

Police believe these smaller operators took on greater risk by dealing directly with the criminal groups, which led to their higher compensation compared to the main suspect. Some of the companies even made small legitimate transactions to avoid suspicion during investigations.

The police began investigating in June 2023 following a report of an investment scam. In March 2024, they arrested two heads of the shell companies, leading them to uncover the ring leader's larger operation. Authorities raided his company on March 19 of last year.

Investigators have seized approximately 620 million won in criminal proceeds from the suspects through pre-indictment preservation measures.

A police official said authorities would push the tax agency to implement tighter documentation requirements to prevent gift card companies from facilitating cash-based money laundering.

“We’ll demand that financial authorities improve systems to require full proof of transaction history from gift card businesses,” the official said.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK JONG-SUH [[email protected]]