South Korea’s top financial regulator has launched enforcement action against six domestic payment gateway (PG) firms accused of facilitating illegal gambling, fraud, and drug-related transactions through their platforms.
The Financial Supervisory Service (FSS) said this week that the companies, whose names were not disclosed, allegedly provided electronic payment accounts to criminal groups running illicit casino websites, voice phishing networks, and even narcotics distribution channels.
According to local media outlet Newsis, the FSS flagged the PG providers during a routine analysis of monthly transaction data, which all PG and electronic payment operators are required by law to submit to the agency. Suspicious account patterns were first identified using in-house monitoring software, prompting a series of on-site inspections at the six firms.
As a result of the investigation, the regulator has warned of “severe punishment” and has already referred some of the cases to public prosecutors, with potential criminal penalties including prison terms of up to 30 years.
The FSS noted that the PG companies allegedly entered into arrangements with criminal operators in pursuit of higher transaction volumes and revenue. By issuing payment accounts to unlicensed gambling and fraud entities, the companies became “direct participants in crimes including fraud and embezzlement,” according to the agency.
One case revealed that a PG provider offered payment services to gambling and voice phishing websites posing as e-commerce platforms. These sites collected money from unsuspecting victims and bettors, while the payment firms received a “large amount of commission” in the process, the FSS said. Another provider is accused of using shell companies to falsify revenue data, a move that artificially inflated the company’s financial performance.
In response to the findings, the FSS announced a series of reforms to enhance oversight of South Korea’s electronic payments sector. These include more frequent on-site inspections, tighter monitoring through data analytics, and closer coordination with law enforcement agencies.
“We will strengthen our cooperation with law enforcement agencies. We will ensure that PG companies involved in crimes such as illegal gambling and voice phishing are punished accordingly,” a spokesperson for the FSS stated.
The regulator also said it would propose legislative changes aimed at expanding its enforcement powers and improving the detection of financial crimes within the payment processing industry.
South Korea maintains one of the strictest gambling regimes in Asia. Apart from limited sports betting and three authorized horse, cycling, and motorboat racing venues, gambling is generally prohibited. The only casino legally permitted to admit South Korean nationals is Kangwon Land’s High1 Resort in Gangwon Province.
