South Korea’s Financial Supervisory Service (FSS) has launched enforcement actions against six local payment gateway (PG) firms for allegedly facilitating illegal gambling, fraud, and drug-related transactions.
Payment Firms Linked to Criminal Networks
According to a report by Newsis, the FSS flagged the firms during a routine analysis of monthly transaction data—a process mandated for all electronic payment operators. Using in-house monitoring software, the regulator identified suspicious patterns, which led to on-site inspections at the six firms.
The investigation revealed that these companies had provided payment services to unlicensed casino sites, voice phishing networks, and narcotics distributors. In one case, a PG firm reportedly partnered with fraudulent gambling and phishing sites disguised as e-commerce platforms. These entities collected money from unsuspecting victims, while the payment firm earned high commissions.
Heavy Penalties and Industry Reforms
As a result, the FSS referred several cases to prosecutors and warned of severe punishment, including prison terms of up to 30 years. Officials emphasized that the PG companies had pursued profit through illegal partnerships and had become direct participants in crimes such as fraud and embezzlement.
One firm even used shell companies to falsify financial data, inflating revenue and deceiving regulators and stakeholders.
In response, the FSS announced a set of industry reforms, including:
- More frequent on-site inspections
- Enhanced monitoring through data analytics
- Closer coordination with law enforcement agencies
“We will strengthen cooperation with law enforcement and ensure that PG companies involved in crimes like illegal gambling and voice phishing are punished,” an FSS spokesperson said.
The regulator also plans to propose legislative amendments that would expand its enforcement powers and improve the detection of financial crimes in the digital payments sector.
Context: South Korea’s Strict Gambling Laws
South Korea enforces some of the toughest gambling restrictions in Asia. Aside from regulated betting on horse racing, cycling, and motorboat racing, most gambling is illegal. The only casino allowed to serve Korean nationals is High1 Resort, operated by Kangwon Land in Gangwon Province.
