South Korea recovers $23M, employs AI to track crypto tax evasion

South Korea’s National Tax Service recovered 33.9 billion won (about $23 million) from five wealthy taxpayers who hid assets overseas, the agency reported. The recoveries were made since July 2025 with cooperation from tax authorities in three foreign countries and through automated reporting systems.

The NTS exchanges information with 163 jurisdictions and conducts automatic data exchange with 119 countries to locate foreign accounts tied to Korean taxpayers. Under a new global reporting framework, the agency expects to receive cryptocurrency transaction data automatically from 56 countries by 2027.

The agency described several recent enforcement actions. In one case a professional athlete left South Korea for an overseas team without settling taxes; the NTS traced hidden accounts through information-sharing and the athlete paid the full amount through a local representative. In another case a foreign business operator fled during an audit; the agency located the person’s bank accounts and a luxury vehicle in a third country, requested assistance to seize the assets, and the taxpayer settled the debt to avoid losing the property. The NTS also entered a bankruptcy court in Indonesia to claim funds from a developer who owed billions of won.

To expand surveillance of virtual asset transactions, the NTS opened a public bid for a Virtual Asset Integrated Analysis System that will use artificial intelligence and machine learning to analyze trading patterns and flag activity that appears to be tax evasion. The project is budgeted at 3 billion won (about $2.02 million). Construction is planned between April and November 2026, with a pilot launch scheduled for November 2026.

NTS documents say the system will combine transaction data, cross-border reporting and pattern recognition to produce audit leads. The system is expected to highlight accounts with suspicious trading frequency, irregular transfers and links to undeclared income, and to flag accounts for audit when patterns suggest unreported income or tax avoidance.

Attorney Sinyoung Choi of Cha & Kwon Law Offices warned, “If the AI identifies an unreported transaction, it could result in penalties.” She noted the system will reduce anonymity for crypto users and that the burden of proof will rest with taxpayers.

The plan has drawn political attention. Opposition People Power Party leaders met with executives from five major South Korean exchanges — Upbit, Bithumb, Coinone, Korbit and Gopax — to discuss cancelling a proposed crypto tax. PPP Floor Leader Song Eon-seok argued that taxing cryptocurrency investors while the Financial Investment Income Tax on stocks was removed would create a “double taxation problem.”

The NTS reported international cooperation was central to recent recoveries and allowed the agency to pursue collection through foreign courts and asset seizures. Agency officials said they will continue expanding data links and automating the intake of cross-border financial information to support enforcement.