A series of 62 raids by South Korean police conducted as part of investigations into frauds with a combined value of KRW62bn (USD41mn) has resulted in the seizure of KRW8.9bn (USD6mn) in criminal proceeds and the arrest of telco insiders who allegedly helped criminals to impersonate banks. The arrests included a 49 year old employee of a mobile virtual network operator (MVNO), who has only been named as ‘A’, and a 27 year old CEO of a bulk SMS messaging business, who has only been named as ‘B’. 34 other employees of the same SMS business were also indicted.
The investigation found that approximately 580 million fraudulent text messages were sent between January 2025 and March 2026 by 18 bulk messaging businesses, including the business run by B. 42 victims of these messages suffered combined losses of KRW8.6bn (USD5.7mn).
The MVNO employee, A, allegedly used his system administrator privileges to spoof the CLI of calls so they appeared to come from genuine financial institutions. Recipients were played automated voice messages that offered credit on relaxed terms. Around 180,000 bogus messages of this type were delivered between January 2024 and March 2026, luring 41 victims into frauds that cost them a combined total of KRW9.4bn (USD6.3mn).
The Seoul Metropolitan Police Agency shared few other details of these crimes, although they did provide pixelated photographs of the arrest of both A and B. The communications providers allegedly involved in these frauds were identified using CDR analysis and by following the flow of transactions.
The shortage of details will encourage pundits to draw whichever inference they like from this police operation. The inference I draw is simple: police in rich countries need to start targeting telco insiders if they want to reduce consumer scams.
The South Korean government is currently striving to calm the nerves of a population that has witnessed a series of telecoms scandals involving data breaches and crime. As a consequence, the police have the incentive and the resources needed to conduct the complicated investigations required to punish wrongdoing by domestic businesses that enable scams. That means raiding offices and conducting physical searches — there were 62 separate raids in this operation — instead of just fantasizing about the potential benefits of data analytics and tracing in the hope of misleading the public into believing that technology will make justice cheap. I welcome this news from South Korea because I see very little evidence of the necessary transformation in government and police attitudes occurring in other rich countries yet.
Implementing new information systems to facilitate the mass tracing of communications is irrelevant if the police will continue to lack the political backing, the human resources and the training required to go after insider criminals. If we really want a big reduction in fraud then we should expect to see news about police operations that cause embarrassment to communications providers that pretended to respect the law. This also means embarrassment for the industry associations that welcomed those businesses as members. Organized crime is operating inside the communications ecosystem though we continue to behave as if we never meet the servants of crime face-to-face.
It is fanciful to believe that everybody working inside telcos is honest and that crime only occurs because of criminals who live in a faraway country. That runs contrary to my own experience of managing risk and financial controls within telcos. Many readers will share my frustration with the anti-scam pantomime currently being enacted by businesses that want governments to believe that telcos will police themselves if only they had a little more data about other telcos. Telcos recruit crooks. It may not be intentional, but it will inevitably happen from time to time. Some of the crooks are junior, but others are CEOs. Asking a middle manager with engineering experience about how to stop crime will accomplish nothing if that person works for bosses who are crooked.
There are plenty of telco insiders who have strong suspicions about their peers. They cannot act because they cannot supply evidence that would stand up in a court of law. That is why we need the police to start tackling the crooks inside telcos. We cannot do it ourselves, but if the police takes the lead, then willing insiders will be able to help. Rewarding whistleblowing would deliver better results than tracing calls. Police need to set the tone so workers in the private sector can respond.
Taking the initiative involves emulating the kind of work that was done in South Korea. Criminals can be found by following the trail of money they leave behind. Why are some of us so keen to talk about the potential benefit of tracing calls if nobody is currently tracing the financial transactions that make crime profitable? A call or a message might be an attempt to commit fraud, but the transfer of money will lead us to the people who are most responsible for fraud.
If we want to restore trust in the communications ecosystem, the first step is to end the charade that everybody we know is trustworthy. To reduce crime, start by tackling the criminals who work alongside us. But then, the crooks in our midst will also encourage the belief that criminals can only be found when looking far away.
This post draws upon an article written for Asia Economic Daily by Oh Ji-eun. You can read that article here.
