Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho speaks at the Economic Regulations Innovation Task Force (TF) meeting held at the government complex in Seoul on the 10th. Provided by the Ministry of Strategy and Finance
Starting in June at the earliest, the limit of simple remittances that can be sent abroad without prior notification or submission of supporting documents will increase from the current $50,000 to $100,000 per year. The Ministry of Strategy and Finance held a meeting of the Economic Regulation Innovation Task Force (TF) at the Seoul Government Complex on the 10th and announced the ‘direction of reform of the foreign exchange system’. The key is to improve the Foreign Exchange Transactions Act and related regulations, which were created in the past to regulate foreign exchange outflows, in line with the reality of a rapid increase in foreign exchange transactions. Under the current foreign exchange transaction regulations, capital transactions, such as financial transactions with foreign countries and investment in overseas assets, are obliged to be reported to the Ministry of Strategy and Finance, the Bank of Korea, and commercial banks in advance. Simple remittances in excess of $5,000 per transaction and $50,000 per year, which are not capital transactions, require documents to be submitted to the bank, and in many cases, prior notification is required. However, starting in June at the earliest, the relevant regulations will be amended to increase the limit on overseas remittances that do not require verification of documentary evidence from $50,000 to $100,000 per year. In addition, the limit of capital transactions exempting prior notification was also raised from $50,000 to $100,000 per year, and the types of transactions subject to prior notification were drastically reduced from 111 to 65. However, to prevent tricks such as ‘split remittance’, the transfer limit per case that requires the submission of supporting documents is maintained at the existing $5,000. In addition, the standard amount of foreign currency borrowings that companies must report to the Ministry of Strategy and Finance or the Bank of Korea will increase from more than $30 million to more than $50 million per year. The government also decided to abolish regulations that prevent companies from bringing in foreign currency borrowed or guaranteed by local financial institutions overseas. The purpose is to ensure autonomy in the management of funds. In the case of direct investment in foreign local corporations, companies are also planning to abolish the system that requires frequent reporting whenever there is a change in the investment amount or industry. In addition, the standard for violations of the reporting obligation for capital transactions, which ends with a warning, will rise from the current $20,000 per case to $50,000. The government has decided to raise the standards for the amount of violations that impose penalties such as imprisonment and fines in case of violation of simple procedural obligations such as prior reporting, and to abolish the penalty provisions through future law revisions. The fine for violation of post-reporting of foreign exchange transactions will be reduced from 7 million won to 2 million won, the same as the fine for violation of prior reporting. In addition, nine securities companies designated as comprehensive financial investment businesses under the Capital Markets Act will be allowed to conduct general currency exchange, and a foreign exchange system development review committee will be established to take charge of interpreting ambiguous foreign exchange laws and discussing system improvement. The Ministry of Strategy and Finance plans to revise related enforcement ordinances and regulations within the first half of this year, and by the end of this year, it plans to prepare legislative procedures from next year by preparing amendments to the law to convert post-reporting of foreign exchange transactions, abolish punishment, and eliminate the division of foreign exchange business by industry. Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho said, “The reform of the foreign exchange system will be carried out step by step carefully, without haste, as it is necessary to completely improve the practice that has been established for decades.” Reporter Park Jong-oh [email protected]
