On January 31, 2024, the Korea Customs Service (KCS) held the 2024 Meeting of Investigation Officials of the National Customs Offices and announced its plan to establish an Economic Security Countermeasure Task Force ("Task Force"), which combines border control and judicial police functions in order to strongly respond to trade crimes. According to the plan, the KCS, with the focus on the Task Force, plans to increase crackdowns on overseas leakage of advanced technology and illegal exports of strategic items by closely cooperating with the Ministry of Trade, Industry and Energy (MOTIE), the National Intelligence Service, the Prosecutors' Office, the U.S. Homeland Security Investigations, and other relevant agencies in Korea and other countries.

In this regard, the KCS has continued to strengthen its crackdown on illegal export of strategic items in cooperation with the international community in view of the Russia-Ukraine War. In 2023 alone, the KCS uncovered foreign trade offenses, such as illegal export of strategic items, worth KRW 367.9 billion. Below are some of the recent cases uncovered by the KCS:

1. Illegal Export of Vehicles and Jet Skies Subject to Export Control in Relation to Russia

A Russian and a Korean accomplice were caught by the customs office for illegally exporting cars and jet skis subject to export controls to Russia by (i) falsely submitting export-related documents and (ii) disguising the exports as exports to Russia's neighboring countries.

The suspects (i) prepared a self-determination form for vehicles and jet skis, designating them as items not subject to export control, and (ii) falsely declared the amount so as not to exceed the export control standards (USD 50,000 in the case of vehicles). The suspects also (i) disguised the exports to Russia as exports to Russia's neighboring countries such as Kazakhstan and Kyrgyzstan, and (ii) exported the vehicles and jet skis to Russia via Malaysia, in order to avoid the customs office's crackdown.

2. Import of U.S.-origin Semiconductor Chips and Re-export to China

The customs office uncovered the smuggling of a U.S. company's semiconductor IC chips for telecommunications, which were designated as strategic items, to China without an export license, after importing them into Korea. In this case, Korea was used as a circumvention channel to avoid the U.S. government's tightened semiconductor export controls against China. In order to export semiconductor IC chips to Korea, an export license from MOTIE is required under the Foreign Trade Act.

The Korean government has been strengthening its crackdown on strategic items more than ever before. As described above, the KCS has become much more aggressive in investigating trade crimes. Further, on December 26, 2023, an amendment to the Public Notice on Trade of Strategic Items expanded the number of controlled items subject to catch-all licenses for Russia/Belarus to 1,159. Further, MOTIE also announced a plan to conduct rigorous investigations on unauthorized exports and circumventions through third countries through close cooperation with the KCS and other relevant agencies. Thus, companies engaged in import/export trade businesses should be cautious and take appropriate measures such as examining whether imported/exported items fall under strategic items or items subject to catch-all license.