South Korea to Require Cross-Border Crypto Transfer Reports to BOK FX System in Crackdown on Illegal Remittances
Summary
- The government said it had pre-announced a revised enforcement decree of the Foreign Exchange Transactions Act that would require cross-border virtual-asset transfers to be reported to the Bank of Korea’s foreign-exchange data system.
- It said agencies including the National Tax Service, the Korea Customs Service, the Financial Supervisory Service and the FIU will share virtual-asset transfer data compiled by the Bank of Korea to strengthen monitoring of illegal foreign-exchange transactions and unauthorized remittances.
- It said authorities will be able to revoke a money changer’s registration under a one-strike-out rule for cases involving voice phishing, illegal trade-payment processing and virtual-asset unauthorized remittance schemes.
Forecast Trend Report by Period
Cross-border virtual-asset transfers into and out of South Korea will be reported to the Bank of Korea’s foreign-exchange data system and shared with relevant agencies including the National Tax Service, the Korea Customs Service, the Financial Supervisory Service and the Financial Intelligence Unit.
The Ministry of Economy and Finance said on Oct. 7 that it will pre-announce a revised enforcement decree of the Foreign Exchange Transactions Act aimed at strengthening the management and oversight framework for cross-border virtual-asset transactions.
The revision is a follow-up to amendments to the Foreign Exchange Transactions Act passed in June. It defines the scope of a newly introduced virtual-asset transfer business and sets registration requirements for operators. The government plans to use the changes to strengthen its capacity to track and monitor illegal foreign-exchange transactions and unauthorized remittance schemes using virtual assets.
The rules will apply not only to transfers between domestic and overseas virtual-asset service providers, but also to transfers between domestic operators and personal wallets. Virtual-asset transfer operators handling such transactions must report related information to the Bank of Korea’s foreign-exchange data system.
Virtual-asset transfer data compiled by the Bank of Korea will be shared with the National Tax Service, the Korea Customs Service, the Financial Supervisory Service and the Financial Intelligence Unit. The key aim is to bring cross-border virtual-asset movements that bypass existing financial institutions into the authorities’ foreign-exchange monitoring framework.
The government will also introduce entry requirements for virtual-asset transfer operators. Businesses must establish the necessary information-technology systems and secure at least two specialists with either more than two years of experience in foreign-exchange operations or relevant training.
Penalties for illegal remittances using virtual assets will also be strengthened. Under a one-strike-out rule, authorities will be able to revoke a money changer’s registration after a single violation of foreign-exchange rules, including voice-phishing cases, illegal trade-payment processing and unauthorized remittances using virtual assets.
The Korea Customs Service’s foreign-exchange inspection authority will also be expanded. If signs of violations involving services or capital transactions are found during inspections of import and export deals, authorities will be allowed to extend the inspection to those related transactions without a separate procedure.
The ministry said it will accept public comments on the revision through Oct. 26, followed by regulatory review, screening by the Ministry of Government Legislation, and vice-ministerial and cabinet meetings. The revised enforcement decree is scheduled to take effect on Dec. 3, the same day the amended Foreign Exchange Transactions Act comes into force.
